Sadly, many seniors in our community struggle month to month to make ends meet on budgets that just can’t cover today’s high cost of living.  Unfortunately, today’s troubled economy is leaving the elderly in a financial pinch, particularly because a large majority of senior citizens rely on Social Security benefits as their only take home income. For this reason, the Congressional Budget Office’s recent estimates that there will not be an increase in Social Security benefits for the next three years has caused great concern for senior citizens and those who care for them.

Since 1975, Social Security benefits have been adjusted by an annual cost-of-living adjustment (COLA) that is designed to prevent an erosion of benefits due to inflation.  This is the first time since 1975 that seniors would be left without an increase to their Social Security benefits. This will leave the 37 million Americans aged 65 and over who receive a social security check each month without an increase.  All the while, their health care costs are skyrocketing.  This, coupled with our troubled economy, caused 3.6 million seniors to live below the poverty level in 2007.

I strongly support Social Security, which has done so much to reduce poverty and improve the quality of life for our nation’s seniors.  I also believe that the COLA is an essential part of Social Security that must be calculated accurately.  That is why I have taken an important step in providing relief for our seniors by introducing the Consumer Price Index for Elderly Consumers Act of 2009 (HR 2429). This bill would provide our seniors with a Cost of Living Adjustment (COLA) that better reflects their actual cost of living. Here’s how it’ll work:

Currently, the Social Security COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is an indicator used to measure the rate of inflation.  The CPI-W reflects the purchasing patterns of folks who earn at least half of their income from earned wages.  The CPI-W, therefore, does not accurately reflect seniors’ cost of living.  The most notable difference between these groups is that seniors spend much more per year on health care costs than their younger counterparts. According to the Bureau of Labor Statistics, seniors spend 12.7 percent of their income on health care costs, compared to an average of 4.7 percent among folks between the ages of 25 and 64.  This is also problematic because health care costs increase faster than those for other goods and services.  

The Consumer Price Index for Elderly Consumers Act of 2009 aims to fix this unfairness by creating a separate Consumer Price Index calculation for elderly consumers (CPI-E) and would base the annual Social Security COLA on the CPI-E rather than the CPI-W.  This will allow the Federal government to more accurately base COLAs on the actual living costs the typical senior must pay.

We must provide the basic benefits that our seniors can count on, regardless of the ups and downs of the economy.  My legislative proposal is a rational approach to a very real problem.  I think that is something Americans want to see from their federal government.  For these reasons, I pledge to work diligently to provide an accurate measure of inflation on our senior citizens and a fair Social Security COLA under the Consumer Price Index for Elderly Consumers Act of 2009.