Congresswoman Chellie Pingree says Administration should change funding formula to help seniors coping with a down economy and rising costs of living

Today Congresswoman Chellie Pingree sent a letter to President Obama asking the Administration to address problems in a funding formula that are preventing a cost-of-living increase to Social Security recipients for a second year in a row. The Administration is expected to announce later this week that there will be no Social Security benefit increase this year, making it even harder for seniors to cover costs for essentials like heating and medication that have risen steeply.

“Seniors have struggled over the last year to pay for the essentials because they received no cost-of-living increase in their Social Security checks. It’s simply too much to ask them to deal with that for yet another year,” said Pingree. “We need to make seniors a higher priority and use a cost-of-living formula that actually reflects what seniors need to buy.”

Since 1975, an automatic cost-of-living adjustment (COLA) tied to the Consumer Price Index (CPI) has been used to determine monthly benefits for Social Security recipients. Since the economic crisis began two years ago, deflation has driven down the CPI, triggering no increase in the annual COLA.

“The problem is that the CPI doesn’t give enough weight to the essentials seniors actually need to purchase through the year—heating fuel, food, and medical bills,” said Pingree. “Despite deflation, all of these costs have gone up and fuel oil has skyrocketed 10 percent. Social Security checks should reflect that, but they won’t this year unless we do something about it. The Administration needs to stand up for seniors and adjust that formula.”

Text of the letter:
Dear President Obama:

Thank you for your commitment to protecting Social Security, and for your leadership in improving the lives of seniors and the disabled. For 35 years America’s most vulnerable populations have been granted a yearly nominal Cost of Living Adjustments (COLAs) to their Social Security benefits. On October 15 these individuals will be served with the devastating news that even though the cost of heating oil, food and prescription drugs have all increased over the last 12 months, they will not be getting a COLA this year. I am writing to urge you to take swift action to delay this announcement until Congress and your administration are able to work together to adjust the Consumer Price Index (CPI) so that it better reflects the true cost of living.

On October 15, your administration is expected to announce that seniors will have to do without the increase in their monthly Social Security benefits because the Consumer Price Index did not increase above the rate of inflation last year. As you know, the automatic COLA was implemented in 1975 to protect seniors and the disabled from falling into poverty as the price of food and basic living needs increased. With no increase this year, this population is at risk of being forced to make choices between paying for basic needs like food, medications and heating oil. We have an obligation to make sure no one in this country has to make decisions like that.

I believe that the methodology used by the Bureau of Labor Statistics to determine the CPI is flawed. More emphasis has to be put on the basic needs that cost seniors the most -- heating fuel, food and medical bills. The cost of gas has increased this year by 4.4 percent, the cost of food has increased 1.1 percent, and medical service costs have increased 3.2 percent. But what I find most staggering is that home heating fuel, which the majority of Mainers rely on to heat their homes, has already increased by a staggering 10.6 percent this year. These numbers are simply not sustainable for our most vulnerable populations.

The Congressional Budget Office (CBO) and the Social Security Administration (SSA) project that COLAs will resume in 2012. This is simply too long for our seniors to wait for an increase in their monthly benefits – we need to ensure that people can afford their most basic needs today. Given the current state of the economy, and the populations that are at risk, I sincerely hope that we can work together when Congress returns in November to make these much needed adjustments to the CPI, and ensure that seniors are granted the increase they deserve this January.

Thank you for your consideration and I look forward to working with you on this important issue.