COLA conspiracy?

A growing number of federal retirees are convinced something is rotten in Washington. As in more rotten than usual. Some think that somebody, for some reason, is playing the numbers game. With their numbers. A game designed to make them, the former feds, lose.

They suspect that the numbers/data that will determine the size of their January 2017 cost-of-living adjustment (COLA) are being cooked. Regular COLAs are critically important to the budgets of a huge group of retirees: Those who get COLAs from the government include former federal and postal workers, retired military personnel and tens of millions of people on Social Security.

Many, maybe most, depend in whole or part on their monthly check from Uncle Sam. Which they expect to go up each year to take into account inflation. To help them keep pace with higher health insurance premiums, much higher long-term care insurance premiums and other things, from beans and bacon to gasoline. Because their payments are linked to inflation, they expect to get a COLA every year. And for a while, it worked that way.

But starting with the Great Recession things started to change. The retirees got a 5.8 percent COLA in 2009. But there was no increase (zero, zip, nada) in 2010 and 2011. In January 2012, retirees got 3.6 percent, followed by 1.7 percent in 2013; 1.5 percent in 2014 and 1.7 percent last year. But there was no COLA this year (2016), and the one coming up in January is on track to be very small, almost microscopic.

Although there is still one month (September) to go in the COLA countdown, it is likely that the COLA which will be announced next month, for January 2017, will be very, very small. While lower gas prices are credited/blamed for the low inflation rate, other things have been getting more expensive year by year. Which is why some retirees are puzzled or suspicious.

  • The average retiree under the Civil Service Retirement System gets $3,529 a month. Remember that is the average. Some get much less, some get much more. Long-time workers (with 41-plus years) retire on 80 percent of salary and that annuity is fully indexed to inflation.
  • The average retiree who retired under the Federal Employees Retirement System gets $1,355 per month.
  • The average Social Security benefit in 2016 is $1,341 per month.

While there is one month remaining in the COLA countdown, the January 2017 COLA amount would be worth about $10.59 per month for CSRS retirees, and $4.07 per month for FERS retirees. Something. But not much.

Some people think the Fed is holding off on any rate increase until after the election lest any rise tamper with the political process.

Others think the Obama Administration, the Labor Department, somebody, is keeping an artificial lid on the “true” inflation numbers to make the economy look better than it really is. In their opinion. Here’s what some folks are telling us:

  • “The Obama administration is fudging the numbers in regards to inflation because the economy is much worse than they are admitting, and the COLA that should be paid out would be too much to afford primarily because of the Obama administration’s sky-rocketing welfare payments. Retirees are being ripped off to keep the votes of welfare recipients at election time!”
  • Retiree Bob Lancione said that columns about retirees, specifically the COLA, seem to get the most viewers. He adds: “Mike, you know my feelings about COLAs, but I truly feel that the federal retirees and Social Security recipients are getting screwed and I believe President Obama has something to do with it. I know you disagree, but so be it. The cost of too many things has gone up not to get a COLA. And they are intentionally keeping the gas prices low.”

The National Active and Retired Federal Employees — which represents both working and retired feds — doesn’t see a plot or a numbers suppression. NARFE believes that while the professionals at the Bureau of Labor Statistics are that — professional and nonpartisan — that the government uses the wrong yardstick to measure inflation for retirees and older Americans.

As for me, I don’t have an opinion either way. Washington manufactures numbers, statistics and data at a blinding rate. They are often corrected later on. Still, they come.

So what do you think?

Nearly Useless Factoid

By Michael O’Connell

According to The Joy of Cooking, the name for Snickerdoodle cookies is a corruption of the German word Schneckennudel, which means “snail noodles”.

Source: Wikipedia