Consumer prices were down by 1% in October. It has just been announced that they declined by a record 1.7% in November! Neither of these was factored into the cost of living adjustment that affects Social Security benefits paid beginning next month, but both will affect the cost of living adjustment to be announced in mid-October 2009. The odds now are pretty good that there will be a net deflation in the year leading up to next year's cost of living adjustment. My reading of the statute is that there will be no negative adjustment in Social Security benefits if that is what happens, but Social Security will need to put out some press release on this in the not too distant future. What about the following year, however? Would any deflation in 2009 be taken out of the 2010 cost of living adjustment -- assuming there is inflation in 2010?
They are never going to take back money no matter how low the cost of living drops.
ReplyDeleteThe one problem is going to be with Medicare if there is no COLA increase and the Part B premium goes up. The law says your benefit in can't be less in January than it was in December because of the Part B increase and Medicare needs the Part B premium to cover a part of operating costs.
So if most people are paying a reduced Part B premium to keep their benefit from going down, Medicare comes up short and the following year the premium goes up and it starts all over.
HI 01001.004 The Variable SMI Premium
https://secure.ssa.gov/apps10/poms.nsf/lnx/0601001004
With the Fed dropping interest rates almost to zero and saying they are going to print money to try to force banks/companies to lend/borrow isn't it likely that within a few months we could be faced with runaway inflation?
ReplyDeleteHeck no. Inflation in 2010 or beyond, perhaps, but we'll be lucky to have "stag-flation" for the next year or two.
ReplyDelete