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October 16th, 2009 (Modified on October 18th, 2009)

$250 Stimulus: Round Two



Since the recession has staved off inflation to a great degree, 2010 will be the first year that there will be no cost of living adjustment (COLA) for the some 50 million Americans on Social Security.  “Recessions drive down prices by nature,” said HSH VP Keith Gumbinger.

In order “to preserve beneficiaries’ purchasing power,” President Obama has proposed to issue a second $250 stimulus check to America’s “seniors, veterans, retired railroad workers and people with disabilities.”

The COLA of 5.8% issued in January was the largest on record. Officials said that high energy costs in 2008 were the reason for the large increase:

[However,] “Since the purpose of COLAs is to preserve beneficiaries’ purchasing power, the decline in overall prices means that beneficiaries do not need a COLA in January 2010,” Kathy Ruffing, a senior policy analyst at the center, wrote in a report this week.

The proposed “second stimulus” has a few particulars seniors should be aware of:

The lack of a cost of living increase triggers several provisions in the law. Among them, the amount of wages subject to Social Security payroll taxes will remain unchanged. The first $106,800 of a worker’s earned income is currently subject to the tax.

Also, Medicare Part B premiums for the vast majority of Social Security recipients will remain frozen at 2009 levels. However, premiums for the Medicare prescription drug program, known as Part D, will increase.

The main criticism surround the proposal is that it negates the system in which COLA is based on:

“I think it would be inappropriate,” said Sen. Judd Gregg, R-N.H. “The reason we set up this process was to have the Social Security reimbursement reflect the cost of living.”

For more, read:

$250 Stimulus Checks for Retirees In May

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5 Responses to “$250 Stimulus: Round Two”

  1. Rob Says: October 16th, 2009 at 11:12 am

    The Social Security cost of living adjustment is messed up!

  2. Tim Manni Says: October 18th, 2009 at 12:23 pm

    Hey Rob,

    Thanks for commenting, we’ll be sure to check out your link.

    Visit us again soon,

  3. Larry Says: February 12th, 2010 at 7:17 pm

    This is a big cover up…there is no way they can say that the total cost of living has not increased from third quarter of 2008-to same in 2009. Undoubtly they don’t look at cost of groceries, insurance, and my god…what doctors charge now for health care. They don’t need a national health ins…they need to regulate the ungodly amounts hospitals and doctors charge for care..Look at the groceries, what they cost and that hipocritical Wal-Mart
    increasing the cost of groceries by 30 percent and claim they are rolling them back by only a few cents…They need
    to check the cost of necessary items from year to year…

  4. Tim Manni Says: February 15th, 2010 at 3:12 pm


    Thanks for commenting. Are you in favor of health care reform as a way to regulate high medical costs?


  5. Larry Says: March 2nd, 2010 at 4:04 pm

    no to nat health ins all the way around….i think that the cost of health ought to be regulated by the federal…everything that is necessary to us is…such as
    gas…electricity…even thoght they say it is not…the public service commission does regulate it.

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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