Social Security Payments to Shrink

Discussion in 'Political Zone' started by ShiningStar, Aug 23, 2009.

  1. ShiningStar

    ShiningStar Well-Known Member

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    Social Security Payments to Shrink for First Time in a Generation

    The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years.

    Sunday, August 23, 2009

    WASHINGTON -- Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise.

    The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975.

    By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.

    "I will promise you, they count on that COLA," said Barbara Kennelly, a former Democratic congresswoman from Connecticut who now heads the National Committee to Preserve Social Security and Medicare. "To some people, it might not be a big deal. But to seniors, especially with their health care costs, it is a big deal."

    Cost of living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels.

    Advocates say older people still face higher prices because they spend a disproportionate amount of their income on health care, where costs rise faster than inflation. Many also have suffered from declining home values and shrinking stock portfolios just as they are relying on those assets for income.

    "For many elderly, they don't feel that inflation is low because their expenses are still going up," said David Certner, legislative policy director for AARP. "Anyone who has savings and investments has seen some serious losses."

    About 50 million retired and disabled Americans receive Social Security benefits. The average monthly benefit for retirees is $1,153 this year. All beneficiaries received a 5.8 percent increase in January, the largest since 1982.

    More than 32 million people are in the Medicare prescription drug program. Average monthly premiums are set to go from $28 this year to $30 next year, though they vary by plan. About 6 million people in the program have premiums deducted from their monthly Social Security payments, according to the Social Security Administration.

    Millions of people with Medicare Part B coverage for doctors' visits also have their premiums deducted from Social Security payments. Part B premiums are expected to rise as well. But under the law, the increase cannot be larger than the increase in Social Security benefits for most recipients.

    There is no such hold-harmless provision for drug premiums.

    Kennelly's group wants Congress to increase Social Security benefits next year, even though the formula doesn't call for it. She would like to see either a 1 percent increase in monthly payments or a one-time payment of $150.

    The cost of a one-time payment, a little less than $8 billion, could be covered by increasing the amount of income subjected to Social Security taxes, Kennelly said. Workers only pay Social Security taxes on the first $106,800 of income, a limit that rises each year with the average national wage.

    But the limit only increases if monthly benefits increase.

    Critics argue that Social Security recipients shouldn't get an increase when inflation is negative.

    They note that recipients got a big increase in January -- after energy prices had started to fall. They also note that Social Security recipients received one-time $250 payments in the spring as part of the government's economic stimulus package.

    "Seniors may perceive that they are being hurt because there is no COLA, but they are in fact not getting hurt," said Andrew G. Biggs, a resident scholar at the American Enterprise Institute, a Washington think tank.

    "Congress has to be able to tell people they are not getting everything they want."

    Social Security is also facing long-term financial problems. The retirement program is projected to start paying out more money than it receives in 2016. Without changes, the retirement fund will be depleted in 2037, according to the Social Security trustees' annual report this year.

    President Barack Obama has said he would like tackle Social Security next year, after Congress finishes work on health care, climate change and new financial regulations.

    Lawmakers are preoccupied by health care, making it difficult to address other tough issues. Advocates for older people hope their efforts will get a boost in October, when the Social Security Administration officially announces that there will not be an increase in benefits next year.

    "I think a lot of seniors do not know what's coming down the pike, and I believe that when they hear that, they're going to be upset," said Sen. Bernie Sanders, an independent from Vermont who is working on a proposal for one-time payments for Social Security recipients.

    "It is my view that seniors are going to need help this year, and it would not be acceptable for Congress to simply turn its back," he said.
  2. jrumann59

    jrumann59 Well-Known Member

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    O Noes a reduction in SS benefits!!!!!!! Really who would have thunk it?
  3. jimnabby

    jimnabby Well-Known Member Zone Supporter

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    Great article. Social Security payments aren't being reduced, contrary to the headline. It's presented as somehow scandalous that there's no cost-of-living increase when cost of living didn't increase. And it turns out the only reason some paychecks may be smaller is because they screwed up the drug benefit program.
  4. Rackat

    Rackat Active Member

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    But...but...but...if you don't get a rise in Social Security, isn't that the same as it declining?


    I swear, if we had todays media in 1969, they would have gone off about Neil Armstrong ruining the Moon's environment when he stepped off the ladder of the Eagle.
  5. Jarv

    Jarv Loud pipes saves lives.

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    Maybe we all should get Gov. jobs, they are the only ones getting cost of living increases these days...Sheesh.
  6. sacase

    sacase Well-Known Member

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    Not for long. A lot of federal employee's are going to Pay Banding, which is a crock of BS. After the first two years in the system, there are no more Cost of living increases. So if we use the numbers from last year let me give you an example.

    Once the cost of living raise is gone, you will no longer get cost of living. Under the new pay banding, the maximum raise you can get is 5%. In Washington DC, the cost of living was raised 4.78%. Under paybanding, if you did an excellent job and earned the maximum raise you will get a raise of .22 percent, which is pretty sad.
  7. JBond

    JBond Well-Known Member

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    I agree. Lets eliminate the drug program. Why waste money on old people that are going to die anyway. We must rethink about the level of care we are going to allow old people to have. Same for fat people. That's what Obama has been preaching all summer.

    ABQCOWBOY Moderator Staff Member

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    Gotta say, this is BS.

    There are going to be significant cost of living increases because of Cap and Trade, because of decreases in Medicare, because of inflation that is sure as death, coming.

    This is pure BS. No other way to put it.
  9. JBond

    JBond Well-Known Member

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    I wish we could opt out of these government run disasters. Just give me back my damn money and let me invest it any way I see fit. Of course the pin heads in congress will never allow it.

    After watching the government screw up every program they run I am amazed at the number of fools that want them to run their medical care also.

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