/PRNewswire-USNewswire/ -- The 37 million Americans aged 65 and over who receive a Social Security check each month are forecast to receive no increase in their Social Security checks next year, according to the Congressional Budget Office's (CBO) 2009 Budget Report.
That would mark the first time since automatic Cost of Living Adjustments (COLA) went into effect in 1975 that seniors would fail to get an increase. Since automatic raises were established, seniors have never failed to receive an annual increase of less than 1.3 percent.
The CBO's Budget and Economic Outlook: Fiscal Years 2009 to 2019, reads on page 29, "[The] CBO anticipates that the year-over-year change in consumer prices for the third quarter of 2009 will show a decline, which implies that next year's cost-of-living adjustment for Social Security and most other benefit programs will be zero."
"If Social Security benefits don't start catching up to the real rise in costs, we're going to see a wave of seniors falling beneath the poverty line," said Daniel O'Connell, chairman of The Senior Citizens League. "It's particularly outrageous that seniors may be forced to accept a $0 raise next year, as our lawmakers have just accepted a $4,700 raise for this year."
Supporters of a zero COLA increase will likely argue that such a move in a deflationary period is fair. However, they do not mention that the way the COLA is calculated fails to accurately track senior costs, since it is based on the spending habits of young, urban workers. As a result, senior costs may go up during periods of deflation, reducing their buying power even further.
A study released by The Senior Citizens League last year found that seniors have lost 51 percent of their buying power since 2000.