For Social Security Recipients, No Raise -- But Some Outrage

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For the second straight year, Social Security recipients aren't getting their expected raise, because the economy isn't generating enough froth to raise prices.

Every year, the Social Security Administration announces an increase for Social Security checks based on the rising cost of living. But in the last two years, prices have barely budged (see below). So, for the second consecutive year, retirees don't get a fatter check.

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Some Congress members are pressing the Outrage button, arguing that withholding a cost-of-living raise could threaten seniors' survival. Seriously:

"Seniors who rely on their modest Social Security payments need these cost-of-living adjustments for their day-to-day survival," said [Rep. Earl Pomeroy (D-N.D.)], who chairs the House Ways and Means subcommittee on Social Security. "Passing this bill will ensure that the lack of cost-of-living adjustment will not jeopardize seniors' ability to survive on their benefits."

Let's back up a second. Social Security is a crucial lifeline for today's seniors, making up more than 80 percent of income for the bottom 50 percent of recipients. But consumer prices are technically lower than they were two years ago. In 2009, recipients actually got a generous boost because surging energy prices lifted the cost-of-living adjustment by almost 6 percent, the biggest raise since 1982.

Those are reasons to shrug off the hyperbolic claims about the SSA threatening seniors' ability to survive. But the House's proposed $250 check to all 58 million retirees and disabled Americans would amount to a $14 billion stimulus with high economic payoff, since seniors are less likely to sit on or save their next check. In an economy that needs more demand, this is one of the most direct ways to do it.

So while I disagree with the accusation that the SSA is jeopardizing anybody's survival chances, I think cutting fresh checks to seniors isn't the worst stimulus idea out there (even if more of this happens).

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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