Payments to seniors won’t go up

WASHINGTON – President Barack Obama on Wednesday attempted to pre-empt the announcement that Social Security recipients will not see an increase in their benefit checks for the first time in three decades, pressing Congress for a one-time payment of $250 to help seniors and disabled Americans weather the recession.

Obama’s proposal, which is expected to cost at least $13 billion, comes as the administration continues to grope for ways to sustain an apparent economic rebound without the kind of massive spending package that could be labeled a second stimulus act by critics.

The administration is already developing plans to direct billions of dollars in federal money to small businesses through community banks, government sources said Wednesday. In recent weeks, the White House has examined a range of proposals to funnel money to constituencies seen as suffering. Administration officials have also been supportive of extending unemployment insurance benefits that were to expire at the end of the year and are contemplating an extension of an $8,000 tax credit for first-time home buyers due to expire Nov. 30.

An increase in benefit checks each January has been a yearly ritual since the mid-1970s, when the government moved to ensure that its subsidies to retirees, pension recipients and others who receive Social Security benefits kept pace with inflation. Today’s announcement by the Labor Department will mark the first time that the federal formula used since then, which is tied to the Consumer Price Index, will translate into no increase at all because consumer prices have remained stagnant in the weak economy. That’s a change from the previous year, when Social Security checks grew by 5.8 percent, an unusually large amount.

The unprecedented lack of a cost-of-living increase was first hinted at last spring in congressional budget estimates and an annual report by the trustees who oversee Social Security and Medicare, the government’s main financial props for the elderly and disabled.

In recent weeks, several members of Congress have proposed legislation that would, in varying ways, compensate Social Security beneficiaries and veterans for the lack of a built-in increase. Until Wednesday, those bills had attracted little notice. Their prospects have been uncertain at a time when deficits are rising, lawmakers are working on expensive changes to the health care system and Congress has already enacted a stimulus package that included a similar $250 payment to retirees and others who depend on Social Security and federal pensions.

Obama’s announcement, however, focused new attention on the prospect of further help to some of the nation’s most economically vulnerable people.

Senate Majority Leader Harry Reid, D-Nev., said for the first time Wednesday that he, too, thought that “providing another economic recovery payment is the right thing to do.” In the House, Speaker Nancy Pelosi, D-Calif., urged lawmakers to support the president’s idea, saying the original $250 payments in the stimulus package “proved an effective way to offer stability and security to millions of Americans and a boost to our economy.”

House Majority Leader Steny Hoyer, D-Md., however, has resisted the idea, saying recently that, in light of the emergency payments for older Americans in the stimulus package, “It’s not as if the Congress has forgotten seniors.”

The new payments are estimated to cost $14 billion, according to legislative sources, although the White House said the price tag would be $1 billion less than that.

The White House has essentially latched on to an approach envisioned in legislation introduced last month by Sen. Bernard Sanders, I-Vt., and Rep. Peter DeFazio, D-Ore. Their bills propose that the $14 billion measure be covered through extra Social Security payroll taxes on wealthy Americans – specifically, on income between $250,000 and $359,000.

“In the midst of a recession, when we are appropriately worried about unemployment and underemployment, we can’t forget about seniors who are also hurting,” Sanders said in an interview.