Today, U.S. Senator Charles E. Schumer announced that he is pushing legislation to provide a $250 check to Social Security recipients who have been slammed with higher costs while receiving no cost of living increase (COLA) last year. In 2009, for the first time since 1975, seniors did not receive a COLA.
The situation has resulted in a reduction in Social Security benefits because Medicare prescription drug premiums have increased – even though inflation has been relatively low -leaving seniors with less money to spend. Combine this with lower investment related income this year and lower pensions and seniors are finding themselves in the middle of a perfect storm. Schumer said that an amendment with similar provision failed in a narrow vote last night – Schumer will work to attach provision to upcoming jobs bill.
“Every time a senior citizen turns around the cost of something they need to survive goes up,”. Schumer said. “The Social Security Administration may say that seniors don’t need a cost of living increase, but all you have to do is go around New York and talk to a senior citizen to find out that everything they need costs more.”
Prior to 1975, Congress had the sole authority to decide when Social Security recipients would receive a cost of living adjustment and chose to enact an increase about ten different times in the 25 previous years. In the early 1970s, a Social Security Advisory Council recommended that Congress enact on a formula to determine whether seniors would receive a COLA. Soon after, Congress enacted legislation that created a formula based upon the Consumer Price Index (CPI). Since 1975, seniors have received a COLA every year. While the CPI has been used since 1975, it does not account for the products that seniors are forced to repeatedly spend their money on like food, heating of their home and prescription medications. If Congress does not act, senior citizens will be forced to go without an increase for the first time in over 30 years. In difficult economic times like these, seniors have already seen their budgets pinched, their savings depreciate and their investment income decline due to stock market troubles.
Despite a low rate of general inflation, health care costs continue to rise rapidly. Moreover, the elderly spend a significantly larger share of their income on these health costs. A recent report by the Medicare Trustees indicates that 1/3 of the average Social Security check will be consumed by out-of-pocket healthcare costs. If seniors are not given relief in 2010, then seniors will see their disposable income reduced due to rising Medicare Part D prescription drug premiums and other healthcare costs.
A single, one-time payment will not adversely impact the long-term deficit outlook and will serve as an efficient economic stimulus to an economy that is just beginning to emerge from the starkest downturn since the Great Depression. Senior Citizens are often among the country’s lowest income brackets and for a sizeable number of seniors, their social security income is their only source of income. These seniors are likely to spend this payment quickly so that the money will go directly into the economy as opposed to being saved.
Today, Schumer outlined how much total money seniors would receive in each region. Here is how the legislation would break down:
o In the Capital Region, seniors will get an additional $59 million in social security payments.
o In Western New York, seniors will get an additional $79 million in social security payments.
o In the Rochester-Finger Lakes Region, seniors will get an additional $64 million in social security payments.
o In the Southern Tier, seniors will get an additional $44 million in social security payments.
o In the North Country, seniors will get an additional $31 million in social security payments.
o In Central New York, seniors will get an additional $55 million in social security payments.
o In the Hudson Valley, seniors will get an additional $101 million in social security payments.
o In New York City, seniors will get an additional $334 million in social security payments.
o In Long Island, seniors will get an additional $130 million in social security payments.
Schumer added, “By putting this money in the pocketbooks of seniors we’ll see maximum bang for the buck. These are people who have serious needs and who will go out and put this money right back into our economy. Our older Americans have worked all their lives and many have sacrificed greatly for this country in its hour of need, this one-time payment is the least we can do to make sure they have some economic security during these hard times.”