A Florida congressman has introduced a bill that would give a 2.9 percent cost-of-living adjustment to federal retirees and those receiving Social Security benefits in 2016.
Rep. Alan Grayson (D-Fla.) introduced the Seniors Deserve a Raise Act on Oct. 16 in response to the Social Security Administration’s widely anticipated announcement last week that federal workers would receive no COLA increase next year.
“Simply put, most of our parents and grandparents desperately need a raise. And they clearly deserve one,” said Grayson about his bill, which has 43 co-sponsors. “My bill calls for a 2.9 percent COLA for 2016, and ensures we give them a more accurate cost-of-living increase in the years ahead. Our seniors are seeing their costs rise — their Social Security payments need to rise as well.”
This year marks the third time in 40 years that Social Security payments will remain flat. All three times have come since 2010.
Grayson’s bill calculates future COLAs based on the Consumer Price Index for the Elderly, or CPI-E, a formula based more on the price of items that seniors buy, such as prescription drugs, and medical expenses.
Currently, SSA determines the cost-of-living adjustment through the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broader index of consumer prices tracked by the Bureau of Labor Statistics.
The CPI-W measures price changes in basic goods and services like food, housing, clothing, transportation, energy, medical care, recreation and education. It determines the annual COLA by comparing consumer prices in July, August and September against those same three months in the previous year.
If prices go up, the COLA rises. If prices drop or stay flat, benefits stay the same. Benefits do not decrease if prices drop significantly.
The numbers for July and August show that overall, consumer prices have fallen since last year. Fuel prices are down by 23 percent from a year ago, according to the August inflation report. But prices for some other goods and services, such as health care and housing, are up.
The Associated Press reports that low gas prices factor more heavily in the CPI-W calculation than the CPI-E.
All told, the COLA affects the benefits 70 million Americans receive.
If the bill sounds too good to be true, that’s because it just might be. Rep. Mike Honda (D-Calif.) introduced his CPI-E Act on the House floor in July, but the legislation has stalled in committee.
“The costs seniors bear are different than those for younger people,” said Honda, when announcing his bill. “Our current method of accounting for cost-of-living adjustments does not take that into consideration. We need to recognize this discrepancy and change the formula that determines federal retirement programs to make sure our seniors can enjoy a safe, secure and healthy life in their later years. Seniors depend on these programs and deserve to be treated fairly.”
Grayson’s bill has been referred to the House Ways and Means and Armed Services committees.