No COLA for Seniors: Why This Is a Problem

by: Ed Zimmer

Floating a trial balloon of no increases in the Cost of Living Adjustment for Senior Citizens ran into the kind of flak that only the elderly can unleash. The stated reason for not increasing Social Security payments is because the Consumer Price index has actually fallen. Since Social Security Payments by law cannot be decreased and the CPI had fallen, payments would remain unchanged.

Of course the Medicare premiums will go up but only a few dollars a month.

This has some in Congress up in arms, saying seniors should get something regardless of the CPI. What no one is talking about is the whole inflation/deflation/CPI and government reports on the economy.

If prices are falling, why are medicare costs rising? The CPI is supposed to track overall costs, but thanks to all the tinkering with the CPI, including the "new or improved" substitutions, the CPI has become a convenient way for the government to hold off mandatory COLAs for all kinds of federal programs, or at least lessen their impact. Now that we have entered a "deflationary" period, the CPI stands out like the emperor in his new clothes.

Speaking as an employed worker, my costs for just about everything have gone up this year, especially in food, where a slight decrease in one item (milk) is overridden by an increase in another (juice). The costs of operating the business have risen by 5-10% this year with one example (water softening salt) reporting a 60 cent a bag increase coming due next month.That will add 30 dollars a week to our operating costs for that one item alone.

If the CPI is accurately reflecting things, shouldn't costs be falling?

Alternate CPI tracking has shown a continuing rise in prices, along the order of 10%, with the only price decreases coming as businesses hold "Going out of Business" sales, further diluting future competition. Whether the government is touting the CPI or the core CPI, both numbers are marginalized so that the government looks like it's handling the situation.

Like other government tracking systems, this one is no longer providing the information necessary for understanding the actual situation on the ground. What is worse is that people who have paid into the system for decades are being denied the funding that they were promised. This doesn't include the looming disaster of future social security payments; this is the here and now.

The US is 11.7 billion dollars in the hole and Congress is being asked to raise the debt limit to somewhere around 13 billion to cover the massive spending that will be needed to offset the loss of consumer spending in the economy.

Yet our aging population will be asked to spend more without any increase.

At least minimum wage workers got an increase this year, but given the economic situation, that may be the last increase they receive in the foreseeable future.