TW: We are experiencing deflation. Therefore, social security recipients are scheduled to receive no cost of living adjustment in their benefit for 2009 and perhaps 2010. This fact is starting to percolate into public view. I would bet you a bunch of COLAs that Congress (with POTUS support) will ignore the model and vote some sort of COLA increase. That would be wrong and grossly unfair to the rest of the country.
SS recipients booked a 5.8% COLA this past January to reflect the incipient inflation that ultimately reversed course rapidly into deflation. No one complained about that one. More importantly for those working, very few folks received anywhere near a 5.8% increase. In many cases folks were and are taking pay cuts.
The headline to the Huffington piece itself was misleading "Millions of older people face shrinking Social Security checks next year", their checks cannot shrink by law. They will face slightly higher co-pays on certain Medicare treatments, just like all of other Americans will face increases on certain goods. Also like other Americans in a deflationary environment they will enjoy lower costs on other goods.
Times are tough, the pain should be shared as equally as possible. Yet I suspect Congress in a bi-partisan manner will approve a COLA, why? Because seniors vote in big numbers. This would be wrong. This epitomizes why our fiscal future has been and continues to be under very serious stress.
From Huffington Post:
"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.
...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."
...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."
http://www.huffingtonpost.com/2009/08/23/millions-face-shrinking-s_n_266404.html
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