Congressman Eliot Engel (D-NY-17) called on Congress to support his legislation to help senior citizens receiving Social Security cope with yet another year without a cost-of-living adjustment (COLA). Rep. Engel is the author of the Guaranteed 3% Cost Of Living for Seniors Act (H.R. 4193) which would guarantee a minimum three percent increase annually in COLA for Social Security recipients.
"It was difficult enough for seniors to manage their finances last year after not receiving a COLA for the first time in three decades. It is even more frustrating for them to have to plan for another, and perhaps even more in the future. Our challenging times mean that people around the country are struggling to pay bills, and for seniors in high cost of living areas, such as New York, it can be a much larger burden," said Rep. Engel.
It is feared that the Bureau of Labor Statistics, which determines the amount of the COLA, will announce in October that next year will be the second consecutive year without an increase in payments. The COLA will be denied unless there is an unexpected increase in Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The COLA formula is currently based on the CPI-W which reflects the purchasing patterns of people who earn at least half of their income from earned wages.
Rep. Engel's legislation would mandate using another index of the Bureau of Labor Statistics, the Consumer Price Index for the Elderly (CPI-E). This is geared towards capturing inflation among those over 62, and is a better indication of seniors' spending habits. The CPI-E would have provided seniors a COLA last year and likely would do the same this year. Rep. Engel is also a co-sponsor of H.R. 2365, the Consumer Price Index Elderly Consumers Act.
Seniors have a different income structure than the one used in CPI-W, as they spend three times more on medical care than those between the ages of 25-64. Seniors spend 12.7 percent of their income on health, as opposed to 4.7 percent for people 25-64, according to the Bureau of Labor Statistics. They have also lost about 24 percent of their buying power since 2000.
The Senior Citizens League (TSCL) supports legislation that would base the Social Security COLA on a consumer price index that uses the CPI-E. The Bureau of Labor Statistics has tracked the CPI-E since the early 1980's. For example, a senior who retired with an average monthly benefit of $460 in 1984 would have received almost $12,856 more over the past 27 years with the CPI-E.
"There is no doubt seniors would be better off if my legislation is enacted, and I am proud to say the National Committee to Preserve and Protect Social Security has applauded my bill. I call on my Republican friends in Congress to join with Democrats and enact this meaningful legislation to make the quality of life for seniors better tomorrow than it is today. Democrats and Republicans each have family and constituents affected by this, and I hope this does not become yet another issue bogged down in partisan bickering," added Rep. Engel.