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Should elderly get a $250 bonus?

Falling prices mean Social Security recipients will get no cost-of-living increase next year.

By Karen Datko Oct 19, 2009 4:39PM

Under the time-honored formula used to calculate Social Security payments, recipients will get no increase AT ALL next year -- for the first time since the automatic cost-of-living adjustment was adopted in 1975. Prices have actually gone down, you may or may not have noticed.


Social Security payments cannot, by law, decrease when the cost of living declines, but neither are they supposed to go up when there is no inflation. And, the Los Angeles Times notes, "The decline in prices means that seniors will be able to buy more with the dollars they're already receiving."

But President Obama and many in Congress want Social Security recipients to get an increase anyway -- in the form of a $250 bonus.


Is this fair or even reasonable? Jay Hancock at The Baltimore Sun, for one, made a case against the one-time payment, which would amount to a 2% raise for the average recipient -- at a cost of $13 billion to the rest of us. He wrote:

Last year's cost-of-living increase for Social Security was 5.8%, tied to the increase in consumer prices that year. How many workers do you know who got 5.8% raises last year? Social Security checks automatically keep up with inflation. Many, many workers are falling behind inflation. The senior-citizen poverty rate in the United States has fallen to about 10% from more than 30% in the 1950s.

We think he makes a darn good point. The fact is that the oft-repeated "I'm on a fixed income" complaint isn't quite accurate. While seniors got that big cost-of-living raise, plus a $250 economic-stimulus check, this year, many workers were taking pay cuts or losing their jobs.


On the other hand, living on Social Security alone without other retirement income is tough, particularly as health care costs continue to soar. Jay says one in 10 seniors live in poverty, and he suggests that if anyone gets extra money, it should be them and other needy people -- not what he calls "the wealthiest generation of senior citizens in history."


Yael Abouhalkah, a columnist at the Kansas City Star, called the proposed $250 payment political pandering. We suspect he's talking about some seniors' opposition to health care reform, and the Los Angeles Times agrees: "Perhaps Obama's real goal here is to win points with seniors and their advocacy groups, quelling some of the anger simmering over proposals to cut the Medicare Advantage program to help finance the health care reform effort."


(On a related note, if you want to know what a sweet deal Medicare Advantage is for some, read this story in The Washington Post.)


What do you think? Should seniors get a $250 bump, which could reasonably be considered a second round of economic stimulus? Or should Social Security recipients have to play by the rules?


Related reading:

Jan 11, 2011 4:20PM
people on social security need a cost of living  increase. maybe the index hasn't gone up, but everything else has. living on a fixed income is no picnic at the park. walk in my shoes before you talk.
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