WASHINGTON — President Barack Obama urged Congress to provide an extra $250 each to about 57 million seniors, veterans and people with disabilities as the Social Security Administration prepared to announce today that there would be no cost-of-living raise in 2010.
Social Security benefits are pegged to inflation, which has been negative this year. But by law, benefits cannot decline. This would be the first time benefits have not increased since 1975, when cost-of-living adjustments became automatic.
Obama's proposal, announced Wednesday, calls for a one-time payment sometime next year. It would be equivalent to about 2 percent of the annual benefit for the average Social Security retiree, senior administration aides said, and also would go to Supplemental Security Income recipients, veterans, railroad retirees and government retirees. Each person could receive just one $250 payment, even if he or she qualified under more than one program.
Altogether, the program would cost about $13 billion. White House officials didn't say how it would be funded but said it would not hurt the solvency of the Social Security trust fund.
"Even as we seek to bring about recovery, we must act on behalf of those hardest hit by this recession," Obama said, noting that countless seniors have seen their retirement accounts and home values shrink during the recession.
Groups representing seniors welcomed the proposal in light of the Social Security news. No increase would be a marked contrast from last year, when surging oil prices boosted inflation and helped lead to a 5.8 percent raise in January.
The extra $250 "is sort of in lieu of COLA," or cost-of-living adjustment, said Richard Fiesta, director of government and political affairs at the Alliance for Retired Americans in Washington. "We hope it will be enacted soon."
Senate Majority Leader Harry Reid, D-Nev., supports the payments, as does Rep. Charles Rangel, D-N.Y., chairman of the Ways and Means Committee, which has jurisdiction over Social Security in the House.
Sen. Judd Gregg, R-N.H., objected. "The reason we set up this process was to have the Social Security reimbursement reflect the cost of living," he said.
Officials insisted the $250 "economic recovery payment" is not the first step toward a second stimulus program. The $787 billion Recovery Act, approved in February, included payments of $250 to seniors, veterans and people with disabilities. Republicans say the economic stimulus drove up the deficit without bringing down unemployment.