WASHINGTON – Despite signs that the United States is slowly recovering from the Great Recession, there will be no cost-of-living increase for more than 50 million Social Security recipients in 2010. It will be the first time an adjustment won't occur -- since 1975.
"Blame falling consumer prices," the Associated Press says. "By law, cost-of-living adjustments are pegged to inflation, which is negative this year because of lower energy costs. Social Security payments, however, do not go down even when prices drop."
However, the Obama administration, says it will find another way to increase recipients' income. This week, President Barack Obama called for a second round of $250 stimulus payments for seniors, veterans, retired railroad workers and people with disabilities.
The payments would match the ones issued to seniors earlier this year as part of the government's economic recovery package, according to the AP. The payments would be equal to about a 2 percent increase for the average Social Security recipient.
The White House estimates the payments will cost $13 billion. How to finance those payments will fall to Congress. But Obama said he's not against borrowing the money, which would boost the federal budgetdeficit like?when Congress approved the first round of stimulus payments.
"Social Security is doing its job helping Americans maintain their standard of living," Social Security Commissioner Michael J. Astrue told the AP. But, he added, "In light of the human need, we need to support President Obama's call for us to make another $250 recovery payment for 57 million Americans."
The Labor Department reported Thursday that consumer prices had dropped by 2.1 percent since the third quarter of 2008. The cost-of-living adjustment for Social Security, or COLA, is based on the change in consumer prices from the third quarter of one year to the next.
The average monthly Social Security payment for all Social Security recipients is $1,094.