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Isn't zero inflation a good thing for seniors?

Social Security benefits, COLAThe Social Security Administration announced  Friday morning that, for the second consecutive year, there will be no automatic cost-of-living adjustment to Social Security benefits. Not because Social Security is hurting for cash (although tax receipts in 2010 and 2011 are expected to dip below benefit outlays, thanks to the economic downturn) but because prices haven't been going up. More specifically, the price hasn't increased on the basket of goods that the program uses to track inflation (known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W to stat geeks) since the third quarter of 2008.

In response, the Obama administration called for Congress to again cut a $250 check for every senior, military veteran and disabled person, just as it did in the 2009 stimulus bill. The price tag last year was a little under $14 billion, which is chump change in the context of a $1.3-trillion deficit. So only a heartless skinflint would object, right?

Maybe not. Seniors may worry about their benefits staying put while their Medicare premiums increase, but the system has a built-in safeguard: According to the Social Security Administration, more than 70% of its beneficiaries (i.e., those with low- to mid-sized incomes) pay income-adjusted Medicare Part B premiums and would be shielded from any increase.

Benefits were also goosed in 2009 by 5.8%, well above the annual rate of inflation, because gas and oil prices were unusually high during the months when the CPI-W was measured. Besides, when Congress created the automatic cost-of-living adjustments in 1972  -- 35 years after the first benefits were paid -- it made sure the payments could go in only one direction: up. According to the Committee for a Responsible Federal Budget, the average benefit would be about $250 lower now if it had been reduced in proportion to the drop in the CPI-W last year.

Still, some advocates for seniors have been clamoring for more than a year for Congress to provide a larger benefit because, regardless of the CPI-W, seniors on fixed incomes are feeling the squeeze. For example, Barbara Kennelly, a former congresswoman who now leads the National Committee to Preserve Social Security and Medicare, noted in a letter to Congress earlier this year that Medicare Part D premiums (for prescription drugs) and other medical costs are increasing, and that the recession clobbered many seniors' retirement accounts.

If the CPI-W really isn't an accurate proxy for seniors' cost of living, then the government should find a better formula. But it's worth noting that advocates for seniors have long complained about the adequacy of Social Security benefits, which account for more than half the income received  by about 60% of Americans over 65. Proponents of the $250 boost in benefits also argue that it would stimulate the economy  by promoting consumer spending. But if stimulus were the goal, the checks would be directed only at low- and moderate-income seniors, who would almost certainly spend them, and not to upper-income seniors, who'd be more likely to save the money.

-- Jon Healey 

Credit: AP Photo / Bradley C Bower


Comments () | Archives (11)

The comments to this entry are closed.

J. Gravelle

Using their own reasoning, the Democrats have actually CUT Social Security:
...for the SECOND year in a row.

The good news is, that they DID manage to find over $20 million to "spread around" to their voter base, namely the dead and incarcerated felons:

Hey, if I thought my career was dying and I was probably going to prison, I might do the same thing...



Long-term zero inflation would be great. Gas prices, wheat, coffeee, milk, sugar, everything is up over last year, there is no deflation.


If seniors are reasponsible citizens the lack of a cost of living increase will not be a problem.

Seniors spend their checks on Food, Housing and Utilities, almost nothing more.

When calculating the cost if living increase for Social Security retirees, the Government conveniently excludes price increases on, you guessed it, Food, Housing and Utilities!

SO, if seniors don't go frittering away their Social Security income on luxuries like Food, Housing or Utilities, they should hardly notice the lack of an increase. Now, doesn't that make sense?

The price at the pump is up 15 Cents this week. That means heating oil, propane and electricity will cost more this winter but as you can see, the Government has shielded the Senior Citizens budgets in the usual incompetent manner.


If the Republicans had done this, the LATs would be screaming about starving the elderly! Now when the Dems do it, it is okay because there is such low inflation. Maybe prices are somewhat stable, if you shop wisely, but taxes and fees are up, way up. If you ride the bus, buy clothes, eat out, everything costs more due to increased taxes levied by the states. Don't forget fees, such as renewing your license and car registration. Obama found money to bail out union members and banks, gave federal workers raises, but stiffs the poor and elderly who have paid 7% or more of their salaries for over 40 years into this stinking SS system. Ripped off!

antonio larrosa

Indudablemente los chinos se están haciendo los amos del mundo si no los para nadie. Toda la crisis que hay en este planeta la están promoviendo ellos con su egoismo desmesurado por vender , vender, y solo vender a precios sin compatencia gracias a que tienen una mano de obra casi gratis. Alguien les ha de dar el alto o vamos a pasarlo francamente mal.

Maurice Abraham

I'm a 68 year-old Senior on SS. A few things to keep in mind:

1. SS was never intended to fund peoples retirement. It was intended as a safety net only so people would not be destitute. Because health care, prescription drugs and other costs are increasing is not a reason to increase benefits. Those cost are increasing for everyone.

2. Seniors are not alone in having their retirement nest eggs decimated over the past 2 years. Anyone with a retirement plan saw the value of the plan's assets fall. However, the younger the person is, the more time they have to rebuild. Mine is down about 30%...with conservative investments! I don't like it, but we're adjusting.
3. There are limits to what government can afford, and ALL of us need to come to terms with the new realities and adjust our lifestyles and expectations accordingly. If we keep pushing for more benefits, the government will be forced to borrow more money, the federal debt will increase and ultimately, the nations credit rating will drop (think Greece). At that point, WE/the government will be paying even more to service the debt...money that could be better put to productive use.

4. I agree the $250 stimulus check should only go to the least well-off. Many seniors are comfortably well-off, have minimal needs and are likely to save any extra money received.

I could go on and on. Bottom line! Going forward, everyone needs to show restraint so we can all get through this tough period.


Health care premiums go up 30% and that is not factored into the cost of living. From personal experience, you run into the donut hole in June, so that your prescription drug out of pocket expense go from $200 a month to over $400 a month, that is a serious inflation issue that is overlooked.

By not having a cost of living increase, you are decreasing the social security benefit amount.

While some people not on it may not give a hoot about the people on Social Security right now, they need to remember this: Most people can't retire on just Social Security. They need a savings plan, 401K plan, pension plan or other help. From personal experience with my 401k plan I found that the only way to keep it was to keep putting money in it so the value of it wouldn't go to zero.

So this means that the standard of living you have, no matter how modest it is, and the home you have, you may have to get rid of and downsize to make ends meet when you retire.
It is a cruel trick to work your whole life to have a home and decent car and then have to get rid of them to be able to make ends meet.

It is a cruel trick to let the Wall Street crowd get bonuses that are bigger then most people's 401k plans while they let your savings and 401k plans go down the tubes
It is a cruel trick for our government to send money overseas in the name of military spending, yet let US citizens become homeless. Our priorities of spending our out of balance. The government should spend money on it citizens first, the military industrial complex second.


Maurice Abrahams posted at 1129am.
"Seniors are not alone in having their retirement nest egg decimated over the past two years". Anyone with a retirement plan saw the value of the plans assetts fall.

Maurice, let me put my concern in the form of questions:

Aside from the real estate value lost (which was not in the plan)just what did public sector employees lose? Unlike seniors on SSI, they got an increase. Have you heard of any Government or public sector being told they will not see an increase?

With their stable employment guaranteed by the public sector (read taxpayer)their credit ratings are in tact

Aren't public sector employees who are working with that kind of job security and guaranteed anual raises, regardless of inflation actually enjoying de facto pay increases?

Can't the above mentioned fortunates buy a house today at half price because of the stress of the poor non public employee who has lost his job?

And can't he drive down to the neighbors driveway and buy his house boat for half price?

And that second or third car for the wife and kids, can't he buy that today from the unfortunate unemployes civilians who has lost everything for pennies on the dollar?

And haven't you noticed the men who are selling their cherished vintge cars, at give away prices, cars they have worked years in the Garage to restore?

Well, the public sector employee or retiree benefits immensely from this recession and the special treatment he gets from the politicians who give benefits to unions so the unions can give the money, support and undying loyalty back in their election campaign.

Yes, the whole country is having a sale and the Banana Republic insiders make out just fine.


The seniors experience zero inflation? How? Where do they live? It must be really far away from the rest of us who experience growing cosst and lower incomes.



Politicians have become very conceited and believe that once they reach Washington they are untouchable. They seem to forget once they get on their high horse, they are still are public servants and can be removed by the vote. The wealthy elites both Democrats and Republicans think once they attain a powerful influence in their constituencies or on Capitol Hill, they can do whatever they want, no matter the desire of the majority of American people.It should be remembered that any slip of the tongue, will be used against the arriving candidate by the Liberal media and the lapdogs in the political parties. The extremist ultra left are out to humiliate you any way they can, so they can proceed with their agenda. The Liberal Democrats have even taken on a financial shroud of massive spending in a time of chronic recession. A major issue that cannot be hidden under the proverbial mat is Illegal Immigration. No matter how they try to disguise it, it keeps coming back to haunt either party. Lawmakers truly deem an open border is a wonderful attribute to our society and all Americans should appreciate that never ending stream of foreigners arriving here with little or no money.

These politicians have compromised America’s safety by lying about the Border Fence construction. It is neither the original expectation of a double fencing (2006 Secure Fence Act); or the completion of the project. It’s alarming to think that Senator Reid, Barbara Boxer, Nancy Pelosi, Janet Napolitano, Russ Feingold will sweep into the Senate or House, with a massive commitment to adding another Amnesty to the first session of Congress. They keep reassuring us that an Amnesty will cost taxpayers nothing. But the non-profit think -tank of the Heritage Foundation, has made a projection of $2.6 TRILLION DOLLARS. When our whole country is in debt through the importation of foreign oil, our propagating military across the globe and the unwavering corruption in Washington they are still considering a path to citizenship for 12 to 20 million criminal aliens.

Yet legislators are still galloping ahead with the spending insaneness, but still wants to add another 2.6 trillion dollars, to our US deficit of over 13 trillion and climbing. In addition to this unspeakable possibility of US insolvency, President Obama's mob, wants to prepare us for drawing illegal immigrants into our Social Security net. (They voting yes to illegal aliens participating in May 2006) Giving away our pensions to people who paid--Nothing into the system and Reid proffering a measly $250.00 to a already financially hard hit senior citizen. If Harry Reid and his associates get their foot back in the door of the Senate, we can expect a defying shove towards mass--AMNESTY. He and his confederates in crime must be disturbed, in trying to pass this bill. Citizens and residents cannot feed their families, cannot keep their means of transportation on the road, or pay their mortgages and he wants—AMNESTY? Neither party is without blame, as this failure of border enforcement remained after the 1986 Ronald Reagan’s bill.

Sen. Reid strangled off E-Verify amendment, limited to a voluntary basis in businesses. Currently Reid, Pelosi Boxer Napolitano, Feingold and the rest of the de-facto monarchy have directed ICE to only arrest full blown criminals and allowing the rest to go back into the communities. Such an act is illegal and contrary to the Immigration bill of 1986. Even our Governors, Mayors cannot be trusted as we have observed with Jerry Brown Gavin Newsom, who did nothing to stop the escalation of Sanctuary Cities in California or other politicians in other comparable cities and states. Reid and his people went along with the policies of Sanctuary Cities, by voting to fund them. These liberals’ extremists want nothing more but to attract every poor person around the world, and accommodate them with a host of benefits, originally reserved for the disadvantaged in America's society.

This mass illegal immigration will lead to overpopulation, a failure of our infrastructure, energy and loss of public entitlements for US citizens and residents. Only the significant removal of all incumbents and a dire warning to each party, that your days are numbered if you usher in another Amnesty. Tea Party candidates are just as vulnerable, if they follow the parties’ philosophical ideas of corporate welfare for businesses; that’s what illegal labor is and giving away American jobs. Any secret sessions to make available Social Security for aliens or endorsing Amnesty are something of treachery to THE PEOPLE. GOOGLE--those Senators and Representatives you are voting for and see their stance on illegal immigration and even check out the costs to your household. Then you choose who should be returned to their high thrones with earmarks, spending sprees, out-of -the-world costs of supporting foreign nationals.?


I can't understand why Obama didn't give the $800+ billion dollar stimulus to the voters. It would have increased his popularity enormously and stimulated the economy too. In fact, I don't know why the government doesn't give a job to anyone who needs one instead of putting them on welfare. If you're giving away money, you could get a return on it. Like, maybe clean up the highways, empty the trash. Stuff like that. The government has plenty of money and if they need more all they have to do is print it.



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The Opinion L.A. blog is the work of Los Angeles Times Editorial Board membersNicholas Goldberg, Robert Greene, Carla Hall, Jon Healey, Sandra Hernandez, Karin Klein, Michael McGough, Jim Newton and Dan Turner. Columnists Patt Morrison and Doyle McManus also write for the blog, as do Letters editor Paul Thornton, copy chief Paul Whitefield and senior web producer Alexandra Le Tellier.

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