Second year in a row, social security benefits stay level
TEXT OF STORY
Kai Ryssdal: This morning’s release of the Consumer Price Index — which was basically flat — seals the deal for 58 million Social Security recipients. Their annual cost of living increases are tied to inflation. And since there isn’t any, they won’t get a bump this year for the second year in a row.
Marketplace’s John Dimsdale reports from Washington.
John Dimsdale: Social Security benefits have been tied to a consumer price index since 1975. But Barbara Kennelly of the National Committee to Preserve Social Security and Medicare, says that index does not take health care costs into account.
Barbara Kennelly: And what do seniors spend their money on? A good part of their check is spent on health care, medicines, doctors.
Kennelly says retirees are falling behind. But Alicia Munnell at the Center for Retirement Research says poverty among seniors actually declined last year. That’s because Social Security recipients got a 5.8 percent cost of living increase in early 2009, plus a $250 per person payment from the stimulus bill.
Alicia Munnell: Social Security recipients are being treated absolutely equitably. There’s no harm being done to them.
Still, President Obama and Democrats in Congress are proposing to give veterans and Social Security beneficiaries another $250 stimulus check. They say the economy will benefit since retirees are likely to spend those checks right away. But deficit watchdogs like Maya Macguineas at the Committee for a Responsible Budget argue it would be better to stimulate job creation more directly and leave Social Security alone.
Maya Macguineas: The concern of course is that seniors are a very influential group and we’re a few weeks before an election and there will be political pressures to pay out more money for Social Security beneficiaries.
Democrats say they’ll bring up the stimulus for seniors bill when Congress returns in November.
In Washington, I’m John Dimsdale for Marketplace.
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