WASHINGTON, DC – Today, Congressman Henry Cuellar, TX-28, released the following statement regarding the expected hold on the 2011 cost-of-living adjustment for Social Security recipients: “This is simply unacceptable and we need to find a solution. Our seniors in the 28th district have earned their Social Security benefits and deserve to have their livelihoods safeguarded. While it is true that we provided a bonus payment of $250 for Social Security recipients in the spring of 2009, the economy is down, 401k balances are down and our seniors are in an economic bind. Social Security is the sole income for many retirees and COLA is an important part of helping them keep pace with inflation."
Background on the COLA:
The annual Social Security COLA is determined automatically according to a formula which has been in the law since 1975. Because of a lack of sufficient economic growth (and correspondingly, little increase in prices) in 2009 and 2010, the Social Security Administration is likely to announce on October 15, 2010 that there will be no COLA for Social Security benefits for 2011. For the first time ever, the result will be a second consecutive year where Social Security retirees, veterans, and people with disabilities saw no increase in their monthly Social Security, Supplemental Security Income, Veterans Administration Disability Pension and Compensation, and Railroad Retirement benefits.
The current situation is a result of economic conditions, not Congressional action or inaction. The COLA is determined by comparing the level of inflation from the third quarter of the current year to the year prior. If positive, then the difference is applied to benefits the following January. The spike in energy costs in the summer of 2008 resulted in a COLA of 5.8 percent, paid starting in January, 2009. Prices dropped in the fall of 2008, and have not yet regained the level of the third quarter of 2008.
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