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<< Previous   of   Next >>   ADVERTISEMENT   Social Security increases The annual percentage increase in Social Security payments this decade: 2000: 2.5 percent 2001: 3.5 2002: 2.6 2003: 1.4 2004: 2.1 2005: 2.7 2006: 4.1 2007: 3.3 2008: 2.3 2009: 5.8 Social Security Administration   CONTACT THE HERALD Do you have a news tip? newstips@heraldnet.com | 425.339.3400   Published: Monday, August 24, 2009 No Social Security raises for two years By Stephen Ohlemacher Associated Press 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. Consumer prices are down from 2008 levels, giving Social Security recipients more purchasing power, even if their benefits stay the same, said Andrew Biggs, a resident scholar at the American Enterprise Institute, a Washington think tank. “Seniors may perceive that they are being hurt because there is no COLA, but they are in fact not getting hurt,” Biggs said. “Congress has to be able to tell people they are not getting everything they want.” READER COMMENTS Log in or register to post new comment | Log out Social Security and Medicare It is certainly no surprise that SS payments will remain static, given lack of inflation. However inflation is measured, it surely doesn't include the cost of food and gas and other necessities, which go up and stay up all the time. A loaf of bread is a good example. Or a jar of peanut butter or meat. But the increase in the Medicare deduction is the real clue, here, as to how the proposed Healthcare legislation would work. If Medicare needs to be increased now, just imagine how much more money will be needed with the addition of millions more people -- many who don't even pay into Medicare. Politicians like to tell use that Medicare and SS "work," and they do -- if you don't count that both are on borrowed money that will eventually not be there to borrow against. At some point the money simply won't be there. There is evidently not even enough money NOW to pay for current services, as we can see by the increase. I wonder at what point SS checks will be severely reduced and Medicare deductions heavily increased to try to stave off bankruptcy in those areas. The definition of "they work" needs some honest discussion. And we don't get it. Laurie Storey | Aug 24, 2009 9:44 am | 0 replies | View all | Post reply | Request removal

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