WASHINGTON — Social Security recipients won’t get a cost-of-living increase next year for the first time in more than a third of a century, and that could boost President Barack Obama’s plan to send seniors another round of $250 payments before the congressional elections.
Democratic leaders in Congress have signed on to the plan, greatly improving its chances, even as some budget hawks say the payments are unwarranted and could add to the federal budget deficit. Republican leaders said they, too, favor the payments but don’t want to increase the deficit to pay for them.
More than 50 million Social Security recipients will see no increase in their monthly payments next year, the government said Thursday, the first year without an increase since automatic adjustments were adopted in 1975.
Blame it on falling consumer prices. By law, cost-of-living adjustments are pegged to inflation, which is negative this year because of lower energy costs. Social Security payments do not go down, even when prices drop.
The White House said the stimulus payments would cost $13 billion, though a congressional estimate put the cost at $14 billion. Obama didn’t say how the payments should be financed, leaving that up to Congress.
Many seniors groups applauded Obama’s plan to provide the $250 payments to about 57 million senior citizens, veterans, retired railroad workers and people with disabilities, saying the recession has reduced home values and diminished retirement funds.
