Federal Deficits as % of Domestic Product
1970-2010
This line chart by the CBO shows the
total deficit or surplus as a percentage of gross domestic
product from 1970 to 2010. Deficits have occurred throughout
the span, except for 1998 to 2001. According to CBO's
baseline, the deficit is estimated to be 8.3 percent of GDP
in 2009 and 4.9 percent in 2010.
Social Security News
Senior Citizens May Not See COLA Increases for a Few
Years; Lower Expenses Can Help
2009 COLA was a real gain for seniors because there
are inflation factors working in their favor
By Tucker Sutherland, editor & publisher
SeniorJournal.com
April 1, 2009 - Newspapers have been highlighting
information from the Congressional Budget Office that projects seniors
will not see increases from cost-of-living adjustments (COLA) for the
next three years, because of the current economic slump. It is probably
true but not necessarily all bad news, since COLA is based on inflation
and the projection is based on prices going down, not up.
The Congressional Budget Office says in its latest
budget estimates that inflation will dip so low that Social Security
recipients will not qualify for annual increases in 2010, or for two
years after that. In 2013 through 2019 when projections are less
reliable - CBO estimates annual increases of 2 percent each year, which
would be among the lowest, according to the Associated Press version.
VP Biden says the $250 will make a big difference
for older Americans, those with disabilities - See
story for link to video by Social Security explaining the
Economic Recovery checks. See Q&A below news story.
The AP points out senior citizens have not gone
three years without a COLA increase since the automatic adjustments
began in 1975.
And, seniors did well this year receiving their
largest pay increase from Social Security since 1982. The cost-of-living
increase was an increase of 5.8 percent in January of 2009
The 2009 boast was a real gain for Social Security
recipients because there were inflation factors working in their favor.
The adjustment in Social Security pay is based on the rise in the Bureau
of Labor Statistics' Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W), from the third quarter of the prior year to
the corresponding period of the current year.
History of Increases
Month
Year
%
Ch.
January
2009
5.80%
January
2008
2.30%
January
2007
3.30%
January
2006
4.10%
January
2005
2.70%
January
2004
2.10%
January
2003
1.40%
January
2002
2.60%
January
2001
3.50%
January
2000
2.50%
January
1999
1.30%
January
1998
2.10%
January
1997
2.90%
January
1996
2.60%
January
1995
2.80%
January
1994
2.60%
January
1993
3.00%
January
1992
3.70%
January
1991
5.40%
January
1990
4.70%
January
1989
4.00%
January
1988
4.20%
January
1987
1.30%
January
1986
3.10%
January
1985
3.50%
January
1984
3.50%
July
1982
7.40%
July
1981
11.20%
July
1980
14.30%
July
1979
9.90%
July
1978
6.50%
July
1977
5.90%
July
1976
6.40%
July
1975
8.00%
The COLA for December 1999 was originally determined as 2.4
percent based on CPIs published by the Bureau of Labor
Statistics. Pursuant to Public Law 106-554, however, this COLA
shown for January 2000 is effectively now 2.5 percent.
For years, many senior citizens have argued that
COLA should be based on a special consumer price index that better fits
the increases that hit senior citizens more that younger people
healthcare for example. The Bureau of Labor Statistics has maintained
such an index - the CPI calculates an experimental price index for
Americans 62 years of age and older. It is sometimes referred to as the
consumer price index for the elderly (CPI-E).
Yet, if this index had been used to calculate the
2009 COLA, the increase would have been smaller about 4.5% versus the
5.8% based on the CPI-W. This indicates senior did well in 2009, which
better prepared them for the years ahead.
The CBO report notes, In the current baseline,
substantially lower inflation for the next few years reduces the
anticipated cost-of-living adjustments for Social Security and other
benefit programs. (CBO anticipates that the year-over- year change in
consumer prices for the third quarter of 2009 will show a decline, which
implies that next years cost-of-living adjustment for Social Security
and most other benefit programs will be zero.)
The CBO also points out that all three of the big
government programs that help mostly seniors Social Security, Medicare
and Medicaid are anticipated to record growth of at least 8 percent
this year.
Some of that growth stems from the relatively high
rate of inflation recorded early in 2008, which boosted cost-of-living
adjustments for retirees and the cost of health care. In addition,
rising unemployment will add to Medicaid spending by increasing the
number of beneficiaries, the report says.
CBO has raised its projection of Social Security
outlays over the 20092018 period by $86 billion (or by 1 percent),
nearly all of which is attributable to an increase in the number of
beneficiaries participating in the Disability Insurance program.
CBO has reduced its projections by similar amounts
for Medicare (primarily because of lower-than-expected outlays in 2008
for prescription drugs under Part D of the program and for hospital
inpatient and post-acute services under Part A) and Medicaid (largely
because of lower-than-expected outlays in 2008).
This seems to be a clear indication that the CBO
sees the cost of healthcare decreasing, which is good news for senior
citizens, who have been hit hard by the increases in the last few
years. This will go a long way in helping seniors improve their
bottomline based on Social Security.
No doubt, senior citizens are not immune from the
recession, especially those with retirement investments in the stock
market or real estate. And, no COLA increase will hurt. But, there
appears to be a possibility that older Americans will see much lower
costs in the expense items that hit them the worst.
April 1, 2009 - Newspapers have been highlighting
information from the Congressional Budget Office that projects seniors
will not see increases from cost-of-living adjustments (COLA) for the
next three years, because of the current economic slump. It is probably
true but not necessarily all bad news, since COLA is based on inflation
and the projection is based on prices going down, not up. 
Trust Funds exhausted in 2041 - the same as last
years estimate