No Cost Of Living Increase

For 2010 For Social Security

There will be no cost-of-living increase for 57 million Social Security beneficiaries next year because consumer prices have fallen, the Social Security Administration said. It marks the first time that Social Security benefits have not been increased year-over-year since the cost-of-living adjustment was put into effect in 1975.

Last year, Social Security beneficiaries got a 5.8% cost-of-living adjustment, the largest since 1982, largely because of the spike in energy prices.

Since there will be no Cost of Living Allowance (COLA) for benefits, the law also prohibits the Social Security Administration from increasing the maximum amount of earnings subject to the Social Security tax. This year and next, the first $106,800 of a worker’s earnings is subject to the 12.4% Social Security tax. Workers typically pay half of that and their employers pay the other half.

To help counterbalance the hit, President Obama is calling on Congress to send another $250 relief payment to seniors and other Americans to stem the economic strain. This has met great opposition from both sides.

In addition to the $250 emergency payments, the White House has also publicly supported the extension of jobless benefits as well as the extension of subsidies to help the unemployed purchase health insurance under Cobra. The president has not said yet whether he supports the expansion of the homebuyer tax credit or where the funding would come from.