No Social Security $$ increase until 2012; Obama double crosses his base, media smothers the story

The Collins Report ^ | August 21, 2009 | Kevin "Coach" Collins

[jmaroneps37]

This is another important story being smothered by the Democrat controlled media.

The Obama administration has quietly announced there will be no raise in social security payments next year and maybe not until 2012, a presidential election year.

Citing a 2008 third quarter cost of living decline, Congress has voted no cost of living increase in next year’s Social Security checks for the first time since 1973.

The Democrats are pointing to their own prediction of a “… [steady] decline in consumer prices through the first three quarters of this year…” Based on this they claim to foresee no need for raises until possibly 1212.

Democrats ignore Consumer Price Index: hide behind flat Inflation

Obama’s base will suffer the most. While 80% of our big cities voted for Obama it’s apparent the elderly, both White and minority, will be asked to “balance the budget” by themselves. There might not be any inflation but the Consumer Price Index (CPI) has risen steadily since January, and people are living by the CPI not the rate of inflation.

Numbers show ignoring the CPI will crush elderly and minorities

Using Gastonia North Carolina as a baseline for CPI, here are some comparisons with other centers where the population is White Black Hispanic elderly and overwhelmingly Obama supporters.

In each of these Urban centers Obama got more than 80% of the vote but:

Those living in New York City need 55% more to live than those in Gastonia.

In Detroit they need 12% more; in Cleveland they need 10% more; Bostonians 25% more

Chicagoans 10.7% more and Oakland Californians need 43% more than those in Gastonia

The poor in these cities receive standard payments the same as everywhere else. The combination of no raise and a rising CPI will actually kill some of them

[cajungirl]

Heh heh,,as a senior I agree. But most don’t. And when the seniors are told no, I suspect the big inheritances that their kids get will start to dry up as they spend down capital rather than save for the kids.

The big unspoken of issue is that the great nmiddle class is leaving money to their kids,,maybe in small amounts, fifty to a hundred grand, maybe in larger amounts. And that is going to be tapped one way or another. But make this generation mad, my generation, who has paid for school, college, wedding, cars, downpapyments for the kids houses, make us mad at your peril.

If my kids started to talk about their parents as people who live swilling at the trough after a lifetime of work and savings, I would spend down every cent of every account rather than leave them a dime.

So careful there if Aunt Mary or Mom and Dad have you in their will.

[kabar]

Citing a 2008 third quarter cost of living decline, Congress has voted no cost of living increase in next year’s Social Security checks for the first time since 1973.

Congress just rubber stamps what the CPI-W formula produces. SS is on automatic pilot. This is not a conspiracy or politically controlled.

COLA Estimates

[kabar]

Citing a 2008 third quarter cost of living decline, Congress has voted no cost of living increase in next year’s Social Security checks for the first time since 1973.

Congress just rubber stamps what the CPI-W formula produces. SS is on automatic pilot. This is not a conspiracy or politically controlled.

COLA Estimates

[kabar]

Since Social Security is underfunded, the Fedgov will use an unholy trinity to bring it in-line with receipts - understate the action rate of inflation, have COLAs fail to keep up with even that artificially-low inflation rate, and then will monetize fedgov debt, which will further fuel inflation.

That is not the way it works. Latest Cost-of-Living Adjustment

The problem is that SS increases (and Medicare Part A) are not tied to revenue. They are not linked, which is why SS is unsustainable and will start going into the red by 2016 or earlier.

[kabar]

That is Medicare part B, which is tied to revenue and costs, unlike SS and Medicare Part A.

[KarlInOhio]

SS COLAs are based on the change in CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) from the third quarter in the prior year to the third quarter in the current year. The calculation time was right in last year's energy price spike, so they got a honking big 5.8% COLA at the beginning of this year (SS COLA FAQ, COLA History). The CPI-U (Consumer Price Index for All Urban Consumers) has dropped in the last year (July to July) by about 2% and the CPI-W was similar, but I don't have a link to a nice table on it. My inflation adjusted bonds have dropped to a 0% return this half year because of that.

CPI-U from 1913-2009

(sorry for the ugly table, but I couldn't format it nicely)

Year Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. Avg. % change Dec-Dec % change Avg-Avg

2006 198.3 198.7 199.8 201.5 202.5 202.9 203.5 203.9 202.9 201.8 201.5 201.8 201.6 2.5 3.2
2007 202.416 203.499 205.352 206.686 207.949 208.352 208.299 207.917 208.490 208.936 210.177 210.036 207.342 4.1 2.8
2008 211.080 211.693 213.528 214.823 216.632 218.815 219.964 219.086 218.783 216.573 212.425 210.228 215.303 0.1 3.8
2009 211.143 212.193 212.709 213.240 213.856 215.693 215.351

[dirtboy]

You’re missing the key point - the Obama Admin doesn’t even want COLAs over the next two years. So the calculation you linked to becomes moot.

[Waco]

PLUS,the first 8750 of taxable income is taxed at 10% now, if they abolish it and put it back in the 15% bracket the person with 8750 in income will be treated to a 50% INCREASE in his taxes. That oughta keep him frosted for awhile.

[Maverick68]

Could you post it again?

[Maryland Man]

This should be expected. Any increases tied to COLA will be minimal as we head into a deflationary time.

My father was suprised to see an increase this year and felt it was not necessary.

The problem is that too many people are dependent on SS as their ONLY source of income, expecting the government to cover their lack of planning for retirement. SS should be used as a supplement to retirement planning, not the foundation.

[TYVets]

I was in the Walmart Superstore last week and I noticed that many canned goods had price increases from 30% to 60% since my previous visit early last month.

I went to the ammo department in Walmart last night.

Good news there 40 S&W FMJ was $12.47 for 50 rounds. About a month ago the same caliber FMJ in a different brand was $15.78, a decrease of 21% and surprise, surprise they still had ammo on the shelves at 9PM

[mountainfolk]

Having read through the posts on the SS cola suspension I have bee unable to determine if the COLA applies to all other government agencies and employees, including military if covered, and welfare benefits. It has been my understanding that COLAs were automatic if a govt check was involved. The socialist democrat party supported taxing SS benefits during the Clinton Gore years and it did not seem to dampen the senior turnout for the RATs. Also, I have not seen anything regarding whether there will be an increase in Medicare payments which generally pretty much wipe out the SS COLA each year. Will the govt now stop that increase as well? Inquiring minds etc.

[kabar]

No, it is not up to the Obama administration to forgo COLA calculations. They can't stop it. And FYI, federal pensions also use the CPI-W calculations for its increases. I receive both SS and a federal pension. Last year both were increased by 5.6%.

The History of COLA

Latest Cost-of-Living Adjustment

[kabar]

See my post #53 re SS. There is no suspension of SS COLAs. The formula used to compute COLAs show that one is not warranted. COLA Estimates

As far as Medicare is concerned, the payment deducted from SS to pay for part B premiums is also computed on the basis of a formula and it is also means tested to a certain degree.

Medicare Part B monthly premiums in 2009

[mountainfolk]

I think you are right about inheritance dollars drying up as seniors supplement their retirement income with their savings to deal with inflation. IMO, many seniors have hung on to savings for survival reasons. We figure that we help our children by not having to depend on them for ANYTHING. It is often the reverse for a lot of us. If our savings are to be diminished or obliterated by the socialist democrat administration that controls our government, and OBAMACARE dominates end of life health considerations, it is obvious that at some point those prudent and resourceful seniors will no longer concern themselves about leaving a financial inheritance to anybody. Why save money for RATS to spend?

[Marty62]

Ok...I have been looking I post on a local blog as well as FR. Going back to June is a danting task. If you don’t believe it sorry. But his exact words were “NBC has learned that Social Security Cost of Living increases will not occur until 2012”

HERE IS THE STORY FROM MAY 2ND:
http://www.msnbc.msn.com/id/30698248/page/2/#storyContinued

[mountainfolk]

Thank you much. Having gotten that out of my craw I can now go and shampoo our Collie who in dog years is as old as her folks. SS for us means SS for her. LOL.

[Marty62]

Does it bother you the least little bit that was announced in MAY...SIX MONTHS BEFORE the normal notification period. IF the great recovery was to be in FULL force by then (Obama Propaganda Ministry) then HOW could this assessment be accurate. WHO is lying? HUH...This is not about the COLA, this is about the LYING that is coming out of the GOVERNMENT. This issue is a Recovery? vs truth? issue. Seniors will understand this, it’s a pocketbook issue. Especially if the GOV raises the Part B premiums of Medicare. That would be an actual REDUCTION of benes.

[Recon Dad]

Nan if feel a bit different. I just started taking SS at 62. For the last 40 years I and my employer contributed almost $250 thousand dollars into the system. If they had let me opt out 20 or 30 years ago I could have invested my money and seen my return right now more than double what I am getting on a monthly basis.
I have saved on my own so that SS is only a small piece of my retirement income, but I played by the rules in place and I’m not complaining. I also feel that if a person has millions and paid into SS like we all did he should take it just like everyone else. The millionaire worked hard for his money just like you and me.

[kabar]

Does it bother you the least little bit that was announced in MAY...SIX MONTHS BEFORE the normal notification period.

No, I already received notification more than a month ago that there would be no COLA increase for next year and probably the year after that.

The next Social Security COLA, effective for December 2009, will be based on the increase (if any) in the average CPI-W for the third quarter of 2008 through the third quarter of 2009. The average CPI-W for the third quarter of 2008 is 215.495 and the CPI-W for July 2009 has decreased by 2.3 percent over this average.

If you check the figures, there is no way that the CPI-W index would increase over August and September to increase the third quarter average over last year's average, of 215.495 that provided a 5.6% average.

This is not about the COLA, this is about the LYING that is coming out of the GOVERNMENT. This issue is a Recovery? vs truth? issue. Seniors will understand this, it’s a pocketbook issue. Especially if the GOV raises the Part B premiums of Medicare. That would be an actual REDUCTION of benes.

Obama has no control of the formula or the COLA. But if people are as ignorant about how the COLA is calculated as you are (and I don't mean ignorant in a pejorative sense), then that is going to be a real big problem for Obama because the seniors will be blaming him for it. We are probably going to see two years without increases because Obama's stimulus package will cause the economy to be stagnate or deflationary. The Japanese experienced something like that in the 1990s for a decade.

And you point out correctly that if the Part B contributions go up, as they are wont to do because they are tied to actual costs [unlike Medicare A and SS], then there will probably be an increase. More and more Americans are entering into Medicare, almost a million a year, as the baby boomer cohort ages. By 2030, one in five Americans will be 65 or older or about double what it is now.

So Obama is going to be suffering a double whammy come the 2010 midterms. Seniors will have had no COLAs for two years and an increase in the Medicaid Part B deduction. And they will blame Obama even though he has no control over it. That's good for us. You can bet Obama and the Dems will be frantic trying to explain how the system works and why they are not responsible. LOL.