I stated last post the FED has been allowed to manipulate our inflation and interest rates these several years to the detriment of our public Trusts like Medicare and Veteran's benefits----and to the benefit of the rich who saw wealth soar with these policies. Congress and the President could have shouted against this FED policy----they could have taken to court that the FED was acting against its mission and outside it scope of authority, but they were silent because they are Clinton Wall Street global corporate neo-liberals working for that Wall Street wealth.
For those not knowing the history of the COLA debate---Congress is using measures of cost to American people that are no longer relative to most American people's lives and certainly not seniors effected the most. The COLA for decades is based more on costs for businesses than individuals and that is why oil/gas factors into COLA so much----cost of production of goods is effected by cost of fuel for corporate manufacturing for example. These few decades have been a finance and service economy----not industrial so this calculation of COLA has been a bad one for decades and we have shouted to change it Cost of Living to reflect health care, child care, food, and home heating fuels like natural gas.
THE SUPER-MAJORITY OF DEMOCRATS IN CONGRESS WITH OBAMA SHOULD HAVE DONE THAT IN 2009 ------AS THEY WORKED SOLELY ON 'SAVING THE WALL STREET BANKS'. NOW, THEY SAY THE REPUBLICANS ARE KEEPING THEM FROM MAKING THIS VITAL CHANGE.
So, the FED calculates COLA on fuel costs factoring in rate of inflation which they manipulated to zero and 1% for years------and VOILA-----seniors and veterans have lost as much as a few hundred dollars a month in COLA increases to SS and VET benefits. That is a lot of money to people often living simply already and it was all unnecessary.
Bad news for retirees: No Social Security cost-of-living increase, higher medical costs for many
By Lisa Rein October 15, 2015
Tens of millions of seniors will see no annual cost-of-living adjustment in their Social Security checks in 2016, the government said Thursday, unwelcome news that also will flatten benefit payments for retired federal workers and service members.
It is only the third time in 40 years — all of them during the Obama administration — that the Social Security Administration has not increased its payments. The raises are tied to the consumer price index (CPI).
About 65 million retired and disabled workers, spouses and children collect Social Security benefits every month, the equivalent of about 1 in 4 households. Another 15 million are disabled veterans, federal retirees and their survivors, and those on Supplemental Security Income, the disability program for the poor.
The raises are tied to the consumer price index (CPI), which has been flat because of lower gasoline prices.
[The retirement costs that are rising faster than Social Security benefits]
The lack of a raise triggers other bad news for retirees: Higher medical costs.
Most Americans have their outpatient care premiums for Medicare Part B deducted directly from their Social Security checks, and the annual cost-of-living increase usually covers any increase to premiums. When it doesn’t, a longstanding “hold harmless” law protects about 70 percent of seniors from having their Social Security payments reduced.
But that leaves about 30 percent of Americans on Medicare to cover a hike to premiums that otherwise would be spread across everyone. That group includes people new to Medicare, federal retirees who don’t receive Social Security payments and about 3.1 million people with higher incomes, that is, those making more than $85,000.
Their premiums could rise by 52 percent, by about $54 a month to $159, according to calculations earlier this year by the Medicare Trustees, and more for those with higher incomes.
[Many federal retirees face higher Medicare premiums]
White House press secretary Josh Earnest said Thursday that the administration “is aware of this, frankly, unintended policy consequence resulting from the formula for calculating cost of living adjustments. And so we’re aware of this problem and it is something that we’re concerned about.”
We have spoken much about the FED manipulation of interest and inflation rates so I won't go into this now-----I will say this-----gas prices were high much of these several years. It is only because of a Presidential election year and a flooding of the US market natural gas competing with US oil that the gas prices are so low. Watch as they rise soon after this 2016 election. The REAL inflation rate felt by all Americans was the same 3-5% and it is now actually higher as food, health care, gas was high, education, rents and mortgages-----all had soaring inflation. Remember, the major driver of this bad COLA calculation is oil/gas-----and those prices were high up until last year. So the FED manipulated inflation rates to zero since 2009 and Bernanke killing our SS and VET benefit COLAs. We all know how much our goods and services have soared these several years. A social Democrat in Congress would have been shouting against this FED manipulation nationally and educating in their districts-----but Clinton Wall Street global corporate pols work for that wealth and corporate power.
'But the COLA will be zero in 2016 as prices have actually dropped from a year ago according to the inflation measure used for the COLA. Lower gas prices are the reason for the lack of inflation. Other prices measured by the inflation index would have to have gone up quite a bit in the last month and there is no indication that has occurred'.
CPI-----is the model used for decades too long-----CPI----E is a model that takes into consideration Cost of Living for seniors but the model needs to change for everyone.
Your COLA Increase in 2016 Will Be: Zero
By Ralph Smith • October 12, 2015 •
It won’t be official until October 15th but, for the third time in the past 40 years, federal retirees, Social Security recipients and others that normally benefit from an annual cost of living adjustment (COLA) will not receive an annual increase in their income. There were also no COLA increases in 2010 and 2011.
(See What Happened to My COLA for 2010? and What About Your 2011 COLA? Forget About It!)
As determined by the relevant data from the Bureau of Labor Statistics (CPI-W) in October 2014, federal retirees generally received a 1.7 percent COLA to their civil service annuities beginning in January 2015. Social Security benefits and military retirement annuities increased by the same amount.
The Consumer Price Index figure that is used to determine the annual COLA figure will be announced later this week. But the COLA will be zero in 2016 as prices have actually dropped from a year ago according to the inflation measure used for the COLA. Lower gas prices are the reason for the lack of inflation. Other prices measured by the inflation index would have to have gone up quite a bit in the last month and there is no indication that has occurred.
The 2016 COLA is determined by comparing the average of the July, August and September 2015 index figures to the average of the same months (the third quarter) from 2014. The percentage increase, if there is any increase, determines the COLA for the coming year. If inflation does not occur according to the government index that is used, the automatic increase does not occur.
As most readers know by now, an increase in health insurance costs for next year has already been announced. In fact, the increase in health insurance premiums will be the largest increase in five years.
As an overall average, the Office of Personnel Management (OPM) has announced the average premium increase in health insurance will be 6.4 percent in 2015. The average increase for participants, however, will be increasing 7.4 percent.
Some federal retirees will opt for the self plus one insurance plan that will be available for the first time in 2016 but, even with this change, many will find their actual health insurance costs will still be higher than last year despite the new option. In addition, for at least some plans, deductibles and co-pays may also be going up under the 2016 health insurance plans.
Increases in health insurance costs are not new, but they often impact older, retired people more than younger ones. Some readers have commented that the CPI used for determining COLA increases for retirees is not accurate because it does not reflect the actual costs or spending habits of older Americans.
In fact, there is a basis for this concern. An index has been developed with different weighting for expenses, such as medical expenses, as elderly people spend more on health care than younger consumers. The index is called the Consumer Price Index–Elderly (CPI-E). The CPI-E has been under review by the Bureau of Labor Statistics for about three decades but it is still considered an experimental program.
Rep. Michael Honda (D-CA) has re-introduced H.R. 3351, the CPI-E Act of 2015, which would adopt a measure of inflation more tailored to the costs of older Americans but, with the massive national debt that is increasing by hundreds of billions each year, there will not be a rush in Congress to increase federal spending.
Under the regular consumer price index, medical care is not given as much weight as many other types of expenses. Retirees are more likely to be going to a doctor or a hospital than getting a college education, so the price index does not necessarily reflect your real expenses if you are retired.
As noted in a recent article by Michael Wald, “Individuals ages 65 and older allocate 13 percent of their spending toward health care costs compared to the 5 percent allocated by the general public. COLAs would be larger using the CPI-E and would more accurately reflect seniors’ real costs.” (See Could There Be a Higher Annuity in Your Future?)
There is also a chance that a number of federal retirees who are Medicare beneficiaries will be paying an inordinate amount for a premium increase that otherwise would be limited to a smaller number of beneficiaries than would normally help pay for an increase in expenses. Those who would pay the higher premiums include 2.8 million new beneficiaries, 1.6 million whose premiums aren’t deducted from their Social Security payments and 3.1 million people with higher incomes. In effect, this means that some federal retirees may get hit with higher premiums. As noted in a recent article, “Starting in January, most retirees under the Civil Service Retirement System (CSRS), who also are enrolled in Medicare Part B, will see a 52% jump in their monthly Medicare premiums due to rules that determine increases in monthly Social Security benefits and Part B premiums.” (See Medicare Part B Premiums Are Scheduled to Rise 52% in January) Legislation has been introduced in Congress to mitigate this increase but, as of this writing, it is not known if this legislation will pass.
The reality is that federal retirees and Social Security recipients, among others, will not be receiving a cost of living adjustment in 2016. Be sure to plan your budget accordingly as your actual expenses will still be going up.
I want to stay with this issue of inflation today because it shows that even as Clinton neo-liberals are posing progressive by pushing the change in calculation of COLA that we need-----they sat and allowed the FED to illegally manipulate that inflation and would do it regardless of COLA calculation model. If we are going to truly get that COLA calculation model changed ----WE NEED TO GET RID OF CLINTON/OBAMA WALL STREET GLOBAL CORPORATE NEO-LIBERALS.
This is a confusing issue but if you take time to read and think of the differences and how much it is costing the American people in their personal wealth----you will see how important this issue is to everyone.
GLOBAL CORPORATIONS AND WALL STREET ARE SEEING THEIR WEALTH SOAR WITH THIS FED INFLATION AND INTEREST RATE MANIPULATION.
'Which means you can have official inflation at a low level (or even falling for certain items), while the amount you actually spend out of your very real pocket is rising! And thus the debate'.
Is the Government Lying to Us About Inflation? Yes!
John Mauldin03/27/2013 Financial Sense
In today’s Outside the Box, Gary D. Halbert (my old and very dear friend and former business partner of many years) reminds us about a few significant facts concerning the Consumer Price Index (CPI) that mainstream economists and the media tend to ignore. The central question is whether the CPI is really indicative of the actual inflation rate. Not likely, says Gary, since the US Bureau of Labor Statistics (BLS), which compiles the CPI, has engaged in methodological shenanigans over the past couple decades (as has been well documented by John Williams of ShadowStats, among others).
The upshot of all their monkeying with the numbers is that the official rate of inflation may be two to four times lower than the actual rate (which is rather convenient if you’re a government bureaucrat trying to hold down interest costs and Social Security payments).
These changes are hotly debated in academic circles. There are many economists who agree with the changes and can show with their models that inflation is low. That is the currently accepted wisdom, or what passes for it. The problem is that inflation only shows up, as one person put it, in the things we actually buy. If your main costs are food, energy, education, and healthcare (ring any bells?), then inflation is a great deal higher than 2%. Other items are actually falling in price. It comes down to the mix of items in the calculations and whether you buy into the concepts of substitution (if beef gets too expensive we buy hamburger rather than steak) and “hedonics,” which says that prices of products drop over time as quality and manufacturing efficiency improve, so the calculation of inflation should take this into account.
Which means you can have official inflation at a low level (or even falling for certain items), while the amount you actually spend out of your very real pocket is rising! And thus the debate.
Having refreshed us on the basic techniques of CPI massage, Gary turns to food and energy, which the BLS includes in “headline CPI” but omits from “core CPI.” He points out that while headline CPI jumped an unexpected 0.7% in February, core CPI rose only 0.2%. That is, food and energy price increases accounted for more than 70% of the rise. “Not good for the economy,” he notes.
And of course, this is all bad news for unwary investors, since
Those who believe that inflation is only 2%, when it may be 5-8%, may be making investment decisions that are almost guaranteed to erode the purchasing power of their money over time. This is especially true with low-yielding investments such as CDs, Treasuries, etc.
Gary wraps up by taking a look at “chained CPI,” which he explains as follows:
[C]hained CPI assumes that when prices rise, consumers will resort to entirely different products, rather than just seeking a cheaper brand. For example, if beef prices rise, chained CPI would assume that consumers might opt for chicken to save money.
The chained CPI debate is raging as we speak: I got an email from the AARP this morning, urging me to tell my Senators to say no to chained CPI being used to calculate Social Security cost-of-living adjustments (COLA) – sounds like they may vote today (Friday) on a bill to do just that. But as Gary points out, we either calculate benefits using chained CPI – which, yes, is tough on those living on a fixed income – or we eliminate the cap on salary subject to Social Security taxation (that is, we raise taxes). As Gary says, “Either way, somebody’s got to pay, and it might end up being a little [of] both.”
I cannot copy the graphs that are great-----but this shows how since Clinton/Bush/Obama the Cost of Living has been calculated using methods from before 1980-----no longer relevant to today ----and these stats have been skewed far more with Bernanke since 2009----all of this matters because we elect Democrats to protect against these manipulations all designed to move wealth to the top and take away wealth from citizens. The manipulation that brings inflation down to zero does not even follow this pre-1980 model----it is crony and illegal. Take a look at this article for the graphs and you see what allowing a global neo-liberal take control of a social Democratic Party leads to. All of this is altered as well when the unemployment rate is allowed to be called 5% when it is 35% -----all this factors into CPI and inflation.
THE BOTTOM LINE-----THIS IS WHY SOCIAL SECURITY AND VETERANS' BENEFIT COLAS HAVE BEEN ZERO AND 1% FOR THESE SEVERAL YEARS.
Clinton neo-liberals are trying as hard as they can to privatize SS along with Republicans so then all of the increases in SS payments will come from the stock market and we all know where that leads. While Clinton neo-liberals are shouting for CPI-E-----the better COLA-----they are pushing to move SS into the stock market.
Shadow Government Statistics.
Alternate Inflation Charts
The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990. The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.
CPI Year-to-Year Growth
The CPI-U (consumer price index) is the broadest measure of consumer price inflation for goods and services published by the Bureau of Labor Statistics (BLS).
While the headline number usually is the seasonally-adjusted month-to-month change, the formal CPI is reported on a not-seasonally-adjusted basis, with annual inflation measured in terms of year-to-year percent change in the price index.
In the charts to the right we show two SGS-Alternate CPI estimates: One based on the pre-1990 official methodology for computing the CPI-U, and the other based on the methodology which was employed prior to 1980.
Please note: Our Data Download is currently only providing the 1980-Based numbers, but 1990-Based numbers will be introduced shortly.
I'll end for now on this look at one SS issue (FED manipulations and COLA) that is not spoken of by any Democratic pol at any level ----yet they will shout ----we fight for SS every election. This COLA issue is the same for Veterans as well. The point----global pols think they need to bring SS payments down because they have altered over and over and over when the SS Trust is going to be depleted----remember when I shared Reagan tripling our payroll taxes in the 1980s just so that SS Trust would be flush for the long term? The SS Trust has been looted and we don't move SS payments down -----we fight to get them back to where they need to be and make that SS Trust solvent through the 21 century with just minor adjustments.
'By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly'.
"For many elderly, they don't feel that inflation is low because their expenses are still going up," said David Certner, legislative policy director for AARP. "Anyone who has savings and investments has seen some serious losses."
By CBSNews AP August 23, 2009, 11:18 AMSocial Security Checks Shrink for Millions
Blank US Social Security checks over social card
Millions of older people will face shrinking Social Security checks next year, the first time in a generation that payments would not rise.
The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975.
By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.
"I will promise you, they count on that COLA," said Barbara Kennelly, a former Democratic congresswoman from Connecticut who now heads the National Committee to Preserve Social Security and Medicare. "To some people, it might not be a big deal. But to seniors, especially with their health care costs, it is a big deal."
Cost of living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels.
Advocates say older people still face higher prices because they spend a disproportionate amount of their income on health care, where costs rise faster than inflation. Many also have suffered from declining home values and shrinking stock portfolios just as they are relying on those assets for income.
"For many elderly, they don't feel that inflation is low because their expenses are still going up," said David Certner, legislative policy director for AARP. "Anyone who has savings and investments has seen some serious losses."
About 50 million retired and disabled Americans receive Social Security benefits. The average monthly benefit for retirees is $1,153 this year. All beneficiaries received a 5.8 percent increase in January, the largest since 1982.
More than 32 million people are in the Medicare prescription drug program. Average monthly premiums are set to go from $28 this year to $30 next year, though they vary by plan. About 6 million people in the program have premiums deducted from their monthly Social Security payments, according to the Social Security Administration.
Millions of people with Medicare Part B coverage for doctors' visits also have their premiums deducted from Social Security payments. Part B premiums are expected to rise as well. But under the law, the increase cannot be larger than the increase in Social Security benefits for most recipients.
There is no such hold-harmless provision for drug premiums.
Kennelly's group wants Congress to increase Social Security benefits next year, even though the formula doesn't call for it. She would like to see either a 1 percent increase in monthly payments or a one-time payment of $150.
The cost of a one-time payment, a little less than $8 billion, could be covered by increasing the amount of income subjected to Social Security taxes, Kennelly said. Workers only pay Social Security taxes on the first $106,800 of income, a limit that rises each year with the average national wage.
But the limit only increases if monthly benefits increase.
Critics argue that Social Security recipients shouldn't get an increase when inflation is negative. They note that recipients got a big increase in January - after energy prices had started to fall. They also note that Social Security recipients received one-time $250 payments in the spring as part of the government's economic stimulus package.
"Seniors may perceive that they are being hurt because there is no COLA, but they are in fact not getting hurt," said Andrew G. Biggs, a resident scholar at the American Enterprise Institute, a Washington think tank. "Congress has to be able to tell people they are not getting everything they want."
Social Security is also facing long-term financial problems. The retirement program is projected to start paying out more money than it receives in 2016. Without changes, the retirement fund will be depleted in 2037, according to the Social Security trustees' annual report this year.
President Barack Obama has said he would like tackle Social Security next year, after Congress finishes work on health care, climate change and new financial regulations.
Lawmakers are preoccupied by health care, making it difficult to address other tough issues. Advocates for older people hope their efforts will get a boost in October, when the Social Security Administration officially announces that there will not be an increase in benefits next year.
"I think a lot of seniors do not know what's coming down the pike, and I believe that when they hear that, they're going to be upset," said Sen. Bernie Sanders, an independent from Vermont who is working on a proposal for one-time payments for Social Security recipients.
"It is my view that seniors are going to need help this year, and it would not be acceptable for Congress to simply turn its back," he said.