Pomeroy Introduces the Seniors Protection Act of 2010

Press Release

Today, Ways and Means Social Security Subcommittee Chairman Earl Pomeroy (D-ND) introduced H.R. 5987, The Seniors Protection Act of 2010. The bill would assist 57 million American seniors, retired and disabled veterans, and disabled individuals with a one-time $250 payment that they deserve in the event that no inflation adjustment is announced this Fall.

"Seniors did not cause the near meltdown of the economy that occurred in the last days of the prior Administration, yet too many are still feeling the brunt of its fallout," said Ways and Means Social Security Subcommittee Chairman Earl Pomeroy (D-ND). "Today we help seniors across the country who face the likely possibility that on October 15th Social Security will announce for the first time ever--as a result of a long-standing statutory formula--that there will not be a cost-of-living-adjustment in Social Security benefits in back-to-back years."

The failed economic policies of the prior Administration left the nation in such a deep recession that, for the first time since automatic cost-of-living-adjustments (COLAs) began in 1975, recipients of Social Security, Supplemental Security Income, Veterans Administration Pension and Disability Compensation, and Railroad Retirement benefits did not receive a COLA in January of this year.

Social Security benefit levels are quite modest -- only $14,000 a year for the average retiree. Yet, the median income for senior households is a mere $24,000, reflecting just how much Social Security means to most elderly Americans. Six in ten seniors rely on Social Security for more than half of their income. About a third of retirees have little other than Social Security to live on.

Although economy-wide measures of inflation have shown no net increase since the last COLA, which reflected price levels in the third quarter of 2008, Medicare premiums and health care costs have continued to rise. Moreover, seniors' other sources of income have weakened as a result of the economic downturn: the financial collapse reduced the value of their IRAs; interest rates are low, reducing income from seniors' savings; and the housing crash reduced seniors' home equity. The one-time $250 payment for retirees and other beneficiaries would represent less than two percent of the average annual Social Security benefit.

"Our seniors who depend on their very modest Social Security benefits worry about meeting their basic day-to-day expenses. I have heard these concerns from seniors in my district and from Members of Congress who are hearing these same worries from their seniors," said Chairman Pomeroy. "I am pleased those Members are joining me in introducing the Seniors Protection Act of 2010. Democrats are honoring America's commitment to protect the purchasing power of seniors' Social Security benefits."

For 75 years, and through 13 recessions, Social Security has been a steady and reliable source of income -- never a day late nor a dollar short. And since 1975, when Congress implemented automatic COLAs, recipients of Social Security have been able to maintain purchasing power over time. Social Security is often the only source of retirement income that is fully protected against the corrosive effects of inflation.

Chairman Pomeroy pledged: "This bill is responsible to seniors and to taxpayers. The authors are committed to fiscal responsibility and will ensure that the Seniors Protection Act of 2010 shall not cause an increase in the federal deficit. When the bill comes to the House floor it will include the necessary offsets to comply with the PAYGO law."

The legislation is supported by seniors:

National Committee to Protect Social Security and Medicare

"For the millions of seniors who rely upon Social Security as their only source of income, and millions more who rely upon it for at least half of their income, a one-time payment to make up for the lack of a COLA is not a luxury, it's a necessity," said former Congresswoman Barbara B Kennelly, President and CEO of the National Committee to Preserve Social Security and Medicare. "I applaud the Members of the Congress who understand that helping seniors maintain their purchasing power for necessities like health care, fuel and food, not only improves their quality of life but also helps the local economy."

Alliance for Retired Americans

Edward F. Coyle, Executive Director of the Alliance for Retired Americans: "Seniors are struggling to get by. $250 may not seem like much on Wall Street, but to retirees on Main Street it could be what allows them to pay their electric bill or buy groceries. We must make sure Social Security meets today's basic needs."

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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