No Social Security Cola Again this Year

The Social Security Administration has announced that there will be no social security COLA again this year.   A COLA is a cost-of-living adjustment.  This will be the second time in history that there has been no automatic adjustment.  The first time there was no COLA was 2010. 

According to the Richmond Times Dispatch:

The cost-of-living adjustments, or COLAs, are automatically set each year by an inflation measure that was adopted by Congress in the 1970s. Based on inflation so far this year, the trustees who oversee Social Security project there will be no COLA for 2011.

The projection will be made official on Friday, when the Bureau of Labor Statistics releases inflation estimates for September.

The timing couldn’t be worse for Democrats as they approach an election in which they are in danger of losing their House majority, and possibly their Senate majority as well.

“If you’re the ruling party, this is not the sort of thing you want to have happening two weeks before an election,” said Andrew Biggs, a former deputy commissioner at the Social Security Administration and now a resident scholar at the American Enterprise Institute.

“It’s not the congressional Democrats’ fault, but that’s the way politics works,” Biggs said. “A lot of people will feel hostile about it.”

This past Friday, the same bureau delivered another painful blow to Democrats: The U.S. lost 95,000 jobs in September and unemployment remained stubbornly stuck at 9.6 percent.

Democrats have been working hard to make Social Security an election-year issue, running political ads and holding press conferences to accuse Republicans of plotting to privatize the national retirement program

I am not at all sure how this affects the Democrats.  Supposedly those on social security will feel hostility and that they are not getting ahead.  It would seem to me that the idea that there was low inflation might slip into those thoughts but I guess not.  On another not, this kind of news usually affects other retirement plans such as pension COLAS. 

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Pensions Revisited

There has been an on-going discussion here on Moonhowlings.net about pensions and other retirement plans.  Some people here are very much oppose to any plans that are from money in  the public coffers.  I asked the serious question if those who oppose plans like VRS, Federal Retirement Programs, etc also oppose military retirement.  To date, no one has answered me. 

Last Sunday, the New York Times  featured a section on pensions entitled, In Budget Crisis, States Take Aim at Pension Costs.

Many states are acknowledging this year that they have promised pensions they cannot afford and are cutting once-sacrosanct benefits, to appease taxpayers and attack budget deficits.

Illinois raised its retirement age to 67, the highest of any state, and capped the salary on which public pensions are figured at $106,800 a year, indexed for inflation. Arizona, New York, Missouri and Mississippi will make people work more years to earn pensions. Virginia is requiring employees to pay into the state pension fund for the first time. New Jersey will not give anyone pension credit unless they work at least 32 hours a week.

“We can’t afford to deny reality or delay action any longer,” said Gov. Pat Quinn of Illinois, adding that his state’s pension cuts, enacted in March, will save some $300 million in the first year alone.

But there is a catch: Nearly all of the cuts so far apply only to workers not yet hired. Though heralded as breakthrough reforms by state officials, the cuts phase in so slowly they are unlikely to save the weakest funds and keep them from running out of money. Some new rules may even hasten the demise of the funds they were meant to protect.

Lawmakers wanted to avoid legal battles or fights with unions, whose members can be influential voters. So they are allowing most public workers across the country to keep building up their pensions at the same rate as ever. The tens of thousands of workers now on Illinois’s payrolls, for instance, will still get to retire at 60 — and some will as young as 55.

One striking exception is Colorado, which has imposed cuts on its current workers, not just future hires, and even on people who have already retired. The retirees have sued to block the reduction

Some of the states mentioned have really cushy pensions. Virginia’s pension, the VRS, is rather modest but livable. The rub with the VRS is that back in the early 80’s most individuals had their pension paid by the state or the locality. That happened in leiu of giving pay raises. (see the history of VRS)

The VRS is actually mandated by the Constitution of Virginia.  The history also explains the following:

House Joint Resolution 392 of the 1993 General Assembly Session requested the Joint Legislative Audit and Review Commission (JLARC) to complete a comprehensive study of VRS. The study concluded:

  • VRS should be established as an agency independent of the executive branch of Virginia government.
  • The appointment of trustees should be a shared responsibility of the Governor and the General Assembly.
  • The VRS trust funds should be established as independent trusts in the Constitution of Virginia.
  • The structure of VRS advisory committees should be established in law.
  • The General Assembly should designate a permanent legislative commission or committee to carry out continuing oversight of the retirement system.

This series of changes to the Virginia Constitution and the VRS enabling statutes occurred in 1995 and 1996. The Constitution of Virginia (Article X, Section 11) now requires the General Assembly to maintain “…a retirement system for State employees and employees of participating political subdivisions. The funds of the retirement system shall be deemed separate and independent trust funds, shall be segregated from all other funds of the Commonwealth, and shall be invested and administered solely in the interests of the members and beneficiaries thereof.” Today, this includes 237 state agencies, 249 counties, cities and towns, 183 special authorities and 145 school boards. As of June 30, 2009, VRS had nearly 347,000 active members and more than 141,000 retirees and beneficiaries.

Back to the military question:  Do those who want to get rid of pensions and retirement for public servants also want to get rid of military retirement?   Freedom is not only preserved by fighting our enemy.  It is also peserved by knowing how to read and write, and by being able to walk your streets without being killed by domestic enemies we often call thugs.  Freedom is knowing that we have first responders to keep us safe. 

All are important members of society who deserve to have their pensions kept intact without meddling and without the proverbial hands in the cookie jar.  After reading the above, I am not even sure what Virginia did was legal.