2013 COLA Watch – March Report (Updated Monthly)

Sorry for the absence. I have been ill.

We are now almost half way through fiscal year 2012. Whether or not there is a COLA for January 2013 will depend on where the CPI-W is from July through September 2012. That’s not far off now.

The baseline level (my term for it,) which was the amount which determined the amount of the 2012 COLA, is 223.233. This was the average CPI-W for July through September 2011. The average CPI-W will need to exceed this amount in order to generate a COLA in 2013.

To remind everyone, the CPI-W (which stands for Consumer Price Index for Urban Wage Earners and Clerical Workers) represents the cost of “a basket of goods and services” during the month in question. The starting point for CPI-W for most items was 1982 through 1984, when the CPI-W was initialized at 100. So, in just under 30 years the cost of living has increased 223.2%

The continuously increasing cost of gasoline is beginning to filter into the cost of living as a whole. On October 1st, the nationwide average cost of regular unleaded gasoline was $3.42. The average decreased to about $3.20 in late December, and has been rising ever since. By the end of Febuary, the average had reached about $3.74. Today, it’s about $3.92 per gallon, March is over in two days, so we should see another jump in CPI-W when the March numbers are published in mid-April.

The February 2012 CPI-W

According to the Department of Labor, Bureau of Labor Statistics (BLS) the CPI-W increased by 0.5% in both January and February, 2012. The CPI-W amounts for the current fiscal year are:

September, 2011 223.688

October, 2011 223.043 (-0.3%)

November, 2011 222.813 (-0.1%)

December, 2011 222.166 (-0.1%)

January, 2012 223.216 (+0.5%)

February, 2012 224.317 (+0.5%)

Here it is in graph form.

For a 1% COLA, the July 2012 through September 2012 CPI-W average would have to be 225.465.

This amount, along with the baseline amount, are shown on the graph.

For comparison, here is the graph for the same period from jast year.

They’re different, but we are approaching the 1% COLA line in each February. We were a bit closer last year, but the deliberate manipulation of the cost of gasoline will continue. A lot of gasoline is being kept out of the market by the oil companies and by speculators, both for their own profit, and by rich conservatives like the Koch Brothers, who hope to weaken the Democrat’s chances in November.

For more information on the CPI-W, please refer to Consumer Price Index Summary.

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2013 COLA Watch – December Report (Updated Monthly)

Fiscal Year 2013 continues.We now have three month’s worth of CPI-W data, but what it means at this point is indeterminable. Whether or not there is a COLA for January 2013 will depend on what happens with the CPI-W from July 2012 through September 2012.

The baseline level (my term for it,) which was the amount which determined the amount of the 2012 COLA, is 223.233. This was the average CPI-W for July through September 2011. We will need to exceed this amount in order to receive a COLA in 2013.

To remind everyone, the CPI-W (which stands for Consumer Price Index for Urban Wage Earners and Clerical Workers) represents the cost of “a basket of goods and services” during the month in question. The starting point for CPI-W for most items was 1982 through 1984, when the CPI-W was initialized at 100. So, in just under 30 years the cost of living has increased 223.2%

The December CPI-W

At the present time, prospects don’t look so favorable for a 2013 COLA.

According to the Department of Labor, Bureau of Labor Statistics (BLS) the CPI-W dropped 0.3% in December from what it was in November. To remind everyone, the October CPI-W dropped from September.

September, 2011 223.688

October, 2011 223.043 (-0.3)

November, 2011 222.813 (-0.1)

December, 2011 222.166 (-0.3)

Here it is in graph form.

For a 1% COLA, the July 2012 through September 2012 CPI-W average would have to be 225.465.

For a 2% COLA, the July 2012 through September 2012 CPI-W average would have to be 227.698.

These amounts, along with the baseline amount, are shown on the graph.

Causes for the Decrease, According to the BLS:

Note: These remarks refer to the CPI-U, which is the index for all urban consumers. It includes about 86% of the population. The CPI-W is a subset of the CPI-U. It contains only about 37% of the population, and is widely considered to be less representative of the expenses of Social Security beneficiaries.

Similar to last month, the energy index declined in December and offset increases in other indexes. The gasoline index declined for the third month in a row and the household energy index declined as well. The food index rose in December, with the index for food at home turning up after declining last month.

The index for all items less food and energy increased 0.1 percent in December after rising 0.2 percent in November. The indexes for shelter, recreation, medical care, and tobacco all posted increases, while the indexes for used cars and trucks, new vehicles, and apparel
all declined.

For more information, please refer to Consumer Price Index Summary.

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2013 COLA Watch – November 2011 Report (Updated Monthly)

We are now in a new fiscal year. Whether or not there is a COLA for January 2013 will depend on what happens this fiscal year, specifically in July through September, 2012

The baseline level (my term for it,) which was the amount which determined the amount of the 2012 COLA, is 223.233. This was the average CPI-W for July through September 2011. We will need to exceed this amount in order to receive a COLA in 2013.

To remind everyone, the CPI-W (which stands for Consumer Price Index for Urban Wage Earners and Clerical Workers) represents the cost of “a basket of goods and services” during the month in question. The starting point for CPI-W for most items was 1982 through 1984, when the CPI-W was initialized at 100. So, in just under 30 years the cost of living has increased 223.2%

The November CPI-W

We are continuing our poor start.

According to the Department of Labor, Bureau of Labor Statistics (BLS) the CPI-W dropped 0.1% in November from what it was in October. To remind everyone, the October CPI-W dropped from September.

September, 2011 223.688

October, 2011 223.043 (-0.3)

November, 2011 222.813 (-0.1)

Here it is in graph form.

CPI-W Jul 11 Thru Nov 2011

For a 1% COLA, the July 2012 through September 2012 CPI-W average would have to be 225.465.

For a 2% COLA, the July 2012 through September 2012 CPI-W average would have to be 227.698.

These amounts, along with the baseline amount, are shown on the graph.

Causes for the Decrease, According to the BLS

Note: These remarks refer to the CPI-U, which is the index for all urban consumers. It includes about 86% of the population. The CPI-W is a subset of the CPI-U. It contains only about 37% of the population, and is widely considered to be less representative of the expenses of Social Security beneficiaries.

The energy index declined for the second month in a row and offset increases in the indexes for food and all items less food and energy. As in October, the gasoline index fell sharply and the index for household energy declined as well. The food index rose slightly in November, though the index for food at home declined as four of the six major grocery store food group indexes fell.

The index for all items less food and energy increased 0.2 percent in November following increases of 0.1 percent in each of the prior two months. The indexes for shelter, medical care, apparel, and personal care all rose. These increases more than offset declines in the indexes for new vehicles and used cars and trucks.

For more information, please refer to Consumer Price Index Summary.

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A “Do Nothing” Plan To Reduce The Deficit For A “Do-Nothing” Congress

Up until now, I have had nothing to say about the so-called deficit reduction “Super Committee.” They have been wasting the nation’s time and money in a deadlock which everyone knew would be the case and which has persisted since August. Now their deadline looms. By this Wednesday, they are supposed to present to Congress completed legislation, ready to vote on, which will reduce the Federal budget deficit by $1.2 trillion over the ten years beginning with fiscal year 2013. If they fail to achieve their task, then a process called “sequestration” will do the same thing — remove $120 billion per year from the Federal budget automatically, half from Defense discretionary spending, and half from non-Defense discretionary spending.

The committee will fail. Everyone has always known they would. Anyone who said different, any pundit, any member of Congress or the Senate, or the President, was playing cynical games.

Here is a chart which shows what we are talking about. The source of the chart is explained below.

The Effect On The Deficit Of The Do-Nothing Budget Compared To Current Law

Note the remarks at the bottom of the chart. Both scenarios reflect a gradual phase down of the wars in Iraq and Afghanistan. The “Do Nothing” budget assumes that the sequestration process created by the Debt Ceiling legislation remains in place. By fiscal year 2015, the annual budget deficit would be about $100 billion per year, if Congress did nothing.

Ezra Klein is, among many other things, a blogger for the Washington Post. For some time now he has been writing about what he calls the “do-nothing-plan” as a means to achieve substantial deficit reduction.

It’s very simple. Congress goes home to, in Mr Klein’s words, “spend more time with their campaign contributors.” While they are gone, the Bush tax cuts automatically expire, the 1997 Balanced Budget Act’s scheduled Medicare cuts kick in, the Affordable Care Act is implemented, and the budget moves roughly into balance.

It’s not an ideal way to balance the budget. The next two fiscal years would be extremely painful for both the Defense Department and the rest of us. But this “do-nothing” budget “helps clarify that the deficit is the result of votes Congress expects to cast over the next few years. If, instead of casting those votes, they do nothing, or pay for the things they choose to do, the deficit mostly disappears.”

According to Mr Klein, “The last few years have added new elements to the do-nothing plan: the triggered sequestration, for instance, and various temporary tax cuts Congress has been extending. James Horney of the Center on Budget and Policy Priorities ran the numbers for Mr Klein’s colleague E. J. Dionne, and he says the do-nothing plan would now lead to $7.1 trillion in deficit reduction — more than even the Fiscal Commission envisioned. Here’s how it breaks down:”

— $3.3 trillion from letting temporary income and estate tax cuts enacted in 2001, 2003, 2009, and 2010 expire on schedule at the end of 2012 (presuming Congress also lets relief from the Alternative Minimum Tax expire, as noted below);

— $0.8 trillion from allowing other temporary tax cuts (the “extenders” that Congress has regularly extended on a “temporary” basis) expire on schedule;

— $0.3 trillion from letting cuts in Medicare physician reimbursements scheduled under current law (required under the Medicare Sustainable Growth Rate formula enacted in 1997, but which have been postponed since 2003) take effect;

— $0.7 trillion from letting the temporary increase in the exemption amount under the Alternative Minimum Tax expire, thereby returning the exemption to the level in effect in 2001;

— $1.2 trillion from letting the sequestration of spending required if the Joint Committee does not produce $1.2 trillion in deficit reduction take effect; and

— $0.9 trillion in lower interest payments on the debt as a result of the deficit reduction achieved from not extending these current policies.

Put another way, all we need to do to solve our deficit problem, is to do nothing. And all we need to do to avoid creating one is to enforce PAYGO rules in Congress. The Democrats are willing and every piece of legislation they have introduced has included a method to pay for it. Up till now, the Republicans have refused to do this. So who is really interested in dealing with the deficit?

Of course, the deficit is a phony issue. The Teabaggers seized on it as their signature issue and forced a multitude of policies onto a country which didn’t want them. They now control the House of Representatives, and are able to block any legislation they don’t like in the Senate.

The huge deficit we are hearing about continually was cynically created by Congress, which was under Republican control from 2001 until early 2007, and a Republican President. They passed a variety of tax cuts and extensions and delays, all of which favored the rich, and made no attempt to replace the money that this cost our government. They started two wars which weren’t paid for. They created Medicare Part D, ostensibly intended as drug coverage but was really meant as a gift to drug companies. This also was was not paid for. Congress and the President did more besides, which is clear from the list just above.

By the time they were done, the government was spending well over $1 trillion above what it took in in taxes. This was deliberate. This was a deliberate attempt to choke off the government’s ability to deal with emergencies and social issues. Republicans could now respond to every emergency and social crisis by bleating the meme that such things were too expensive, the government couldn’t afford it. We have all seen the results of this dishonest scheme by the Republicans — a recession which will not end, an obscenely high unemployment rate, and an economy which is barely stumbling along. Remember this when you vote next November. You don’t give another brick to a thug who has smashed all your windows with bricks.

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SSA 2013 Cola Watch – October Report (Updated Monthly)

We have now started a new fiscal year. Whether or not there is a COLA for January 2013 will depend on what happens this fiscal year, specifically in July through September.

The baseline level (my term for it,) which was the amount which determined the amount of the 2012 COLA was 223.233. This was the average CPI-W for July through September 2011. We will need to exceed this amount in order to receive a COLA in 2013.

To remind everyone, the CPI-W (which stands for Consumer Price Index for Urban Wage Earners and Clerical Workers) represents the cost of “a basket of goods and services” during the month in question. The starting point for CPI-W for most items was 1982 through 1984, when the CPI-W was initialized at 100. So, in just under 30 years the cost of living has increased 223.2%

The October CPI-W

We’re not off to a good start.

According to the Department of Labor, Bureau of Labor Statistics (BLS) the CPI-W dropped 0.3% in October from what it was in September.

September, 2011 223.688

October, 2011 223.043 (-0.3)

Here it is in graph form.

CPI-W July 2011 Through October 2011

For the record, I don’t believe it either.

For a 1% COLA, the July 2012 through September 2012 CPI-W average would have to be 225.465.

For a 2% COLA, the July 2012 through September 2012 CPI-W average would have to be 227.698.

These amounts, along with the baseline amount, are shown on the graph.

Causes for the Decrease, According to the BLS

Note: These remarks refer to the CPI-U, which is the index for all urban consumers. It includes about 86% of the population. The CPI-W is a subset of the CPI-U. It contains only about 37% of the population, and is widely considered to be less representative of the expenses of Social Security beneficiaries.

A decline in the energy index more than offset small increases in the indexes for food and all items less food and energy to create the all items decline. The energy index turned down in October after increasing in each of the three previous months as the gasoline and household energy indexes declined after a series of seasonally adjusted increases. The food index rose in October, but posted its smallest increase of the year as the fruits and vegetables index declined sharply.

The index for all items less food and energy increased 0.1 percent in October; this was the same increase as last month and matches its smallest increase of the year. While the shelter and medical care indexes accelerated in October and the apparel index turned up, the indexes for new vehicles, used cars and trucks, airline fare, and recreation all declined.

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SSI Primer #1 – What Is SSI, What Are Its Basic Requirements, And What Does It Have To Do With Social Security?

What Is SSI (Supplemental Security Income?)

One recurring Teabagger meme is that Social Security is entitling people and paying them benefits who never worked or contributed a cent to Social Security. Another way they say it is that Social Security is paying illegal aliens. All of this is not true. This is repeated often enough that it probably qualifies as a “Big Lie.” A lot of people at the willfully ignorant end of the political spectrum (which, unsurprisingly, corresponds with the extreme right wing accepts this meme as true, and what’s more, blames Obama for it. It seemed to me that it was time for me to write a bit about Supplemental Security Income (SSI) and to try and educate people a little bit about this program which is not as well known as is Social Security.

Supplemental Security Income (SSI) is a federally administered cash assistance program for the aged, blind, or disabled.  It pays a stipend to these individuals who have limited income and resources, and who meet other eligibility criteria. The basic rate, called the Federal Benefit Rate (FBR) for 2011 is $674.00.

SSI has been in existence since January, 1974. The legislation creating the program was a result of President Nixon’s effort to reform the nation’s welfare programs. At that time, each state had similar programs called Aid to the Blind, Aid to the Permanently and Totally Disabled, and Aid to the Aged. Each state had different rules, disability criteria, and payment amounts, which many, including the Nixon Administration, felt were irrational or unfair. President Nixon thought these programs should be federalized and run by the Social Security Administration. Thus, SSI was created. President Nixon signed the Social Security Amendments of 1972 on October 30, 1972 which created the SSI Program.

As of January 2011, there were 7.7 million SSI recipients, up from 7.5 million in January 2010. The total amount paid to SSI recipients in calendar year 2010 was $47.8 billion, up from $45.9 billion in calendar year 2009. Compare this to Social Security, which had 53 million beneficiaries in 2009 and paid a total of $675 billion to them during that year.

SSI reveals its original State roots in one area. The individual states are permitted to add extra cash to SSI recipients who reside in those states. This provision is called Optional State Supplementation (OSS.) Fifteen States (1) give their OSS money to the Social Security Administration to administer for them. SSA adds the appropriate OSS amount to each recipient’s FBR and pays a combined payment. The states determine the eligibility criteria for OSS payments and their amounts, and SSA takes full responsibility for administering them correctly. This additional cash from these states is also referred to as the State Supplemental Payment (SSP,) particularly when dealing with individual recipients. Thirty states (2) pay extra cash to SSI recipients directly, without involving the SSA in any way. The remaining six states (3) states do not pay any additional cash.

Who Is Eligible?

In order to be eligible to receive SSI payments, an individual must prove the following:

* He must be aged (age 65 or older), blind, or disabled. (See next section)

* He must be a US citizen, either by birth or by naturalization, or else be an aliens “lawfully admitted for permanent residence” (LAPR.) Certain other aliens are also eligible in rare circumstances. Undocumented aliens, or if you teabaggers and wingnuts prefer, illegal aliens, are not eligible for SSI. Another right wing Republican meme shown for the lie it is.

* He must legally reside in one of the 50 states, the District of Columbia, Northern Mariana Islands, or else be the child of military parent(s) assigned to permanent duty outside of the US, or else be a student (certain restrictions apply) temporarily abroad. I never in 22 years saw anyone in either of the last two groups.

* He must have income and resources within certain limits (this will be discussed in future Primer articles.)

* He must have filed an application for payments. There is no retroactivity in SSI.

There is no work requirement for SSI, as there is for Social Security. An applicant does not need to have 40 quarters of coverage, or any quarters at all.

Who, Despite Meeting All The Above Criteria, Is Not Eligible For SSI?

Certain individuals may meet all the above criteria, but still would be ineligible for SSI. Some causes of ineligibility are:

* Residency in a public institution (such as a correctional facility or a government hospital not paid by Medicaid, etc.) throughout an entire month.

* Failure to apply for all other benefits for which they may be eligible (including Social Security benefits.)

* Has an unsatisfied warrant or has violated parole conditions.

* Failure to give SSA permission to contact any financial institution for financial records, or to provide information or documentation required by SSA to process the claim.

* Absence from US for 30 consecutive days (with some exclusions). Ineligibility continues until US residency has been reestablished for 30 consecutive days.

There are other factors which can cause ineligibility, but these are the main ones.

Aged, Blind, Or Disabled

Aged Individuals are those over 65 years of age. Applicants for SSI payments on age must submit adequate proof of age, under basically the same rules that Social Security uses to establish age for its beneficiaries.

Disabled Individuals are those who meet the same definition of disability as Social Security used for SSDI beneficiaries, which is:

* the individual has a medically determinable physical or mental inpairment; and

* which is expected to last at least one year or result in death.

Blind Individuals are those who meet the definition of “statutory blindness,” meaning the individual:

* has central visual acuity of 20/200 or less in the better eye with the use of a corrective lens; or

* has a limitation in the field of vision in the better eye, so that the widest diameter of the visual field subtends an angle no greater than 20 degrees. (This is sometimes colloquially referred to as “tunnel vision”)

Again, this is the same definition of blindness that Social Security uses for its blindness determinations.

(1) Federally-administered SSP’s: California. Delaware, District of Columbia, Hawaii, Iowa, Massachusetts, Michigan, Montana, Nevada, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont

(2) State-administered OSS Payments: Alabama, Alaska, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Minnesota, Missouri, Nebraska, New Hampshire, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Texas, Virginia, Washington, Wisconsin, and Wyoming

(3) States which do not participate in the OSS provision: Arizona, Arkansas, Mississippi, Tennessee, and West Virginia.

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2012 Federal Retiree COLA: CSRS COLA 3.6% — FERS COLA 2.6%

COLAs for both CSRS and FERS are calculated based on the same data that SSA uses to calculate their COLAs, the CPI-W figures for July, August, and September of each year. Like SSA, neither CSRS nor FERS has had a COLA since January, 2009.

For CSRS, this the end of the story. CSRS annuitants will receive a 3.6% COLA in January 2012, exactly like SSA beneficiaries.

For FERS, the story is a little different. Under FERS, the basic retirement annuity receives a COLA equal to the increase in the CPI-W only if the increase in the CPI-W is less than 2.0%. If the increase in the CPI-W exceeds 2.0%, as it did this year, the COLA is reduced. Here are the rules –

* If the CPI-W increases by up to 2%, then the FERS annuity increases by the same percentage.

* If the CPI-W increases by 2% to 3%, the FERS annuity increases by 2%.

* If the CPI-W increases by more than 3%, the FERS annuity increases by the rise in the CPI-W minus one percentage point.

Since the CPI-W increased by 3.6%, then the third option applies. The FERS COLA is only 2.6%

For those of you who aren’t retired Federal employees, please allow me to explain the difference between CSRS and FERS.

CSRS (the Civil Service Retirement System) came into existence in 1920. It predates Social Security. Basically, workers contributed 7% of their wages into the trust fund. The amount of the annuity was based on the the number of years that the worker paid into the system, the amount he earned in his highest three years, and his age at retirement.

FERS (the Federal Employees Retirement System) became effective for all Federal employees hired on or after January 1, 1984. This coincided with the day that all newly hired Federal employees were mandatorily covered by Social Security. Workers contribute 1% of their wages into the trust fund. They also contribute the same amount as all other workers into Social Security. Lastly, they have something called the Thrift Savings Plan (TSP,) which is similar to a 401(k.) Participation in the TSP is optional, and the worker can choose a variety of places where to invest his money, from Treasury bonds to Wall Street. Those workers who chose to have their thrift savings contributions go to Wall Street took a severe beating in 2008. We had a friend who told us it would take years for her to recover what she had lost in the 2008 crash. She lost 44% of the value of her TSP.

Like all Federal employees who were employed by the government prior to January 1, 1984, I was given the option to switch from CSRS to FERS and SSA. I did some figuring and determined that it would cost me about 3% additional out of each paycheck to match my benefits under CSRS. I declined. Most did. One good thing about FERS — every Senator and Representative elected for the first time since January 1, 1984, is covered by FERS. That, plus Social Security is their retirement system. They get nothing fancy, unless the millionaires and billionaires and corporations who have bought them have made some private arrangements for their retirement.

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