WASHINGTON — Social Security recipients won't get a cost-of-living increase next year for the first time in 34 years, and that could boost President Barack Obama's plan to send seniors a $250 payment just before the congressional elections.
Democratic leaders in Congress have signed on to the plan, improving its chances even as some budget hawks say the payments are unwarranted and could add to the deficit. Republican leaders said they, too, favor the payments but don't want to increase the deficit to pay for them.
More than 50 million Social Security recipients will see no increase in their monthly checks next year, the government said Thursday. It will be the first year without an increase since automatic adjustments began in 1975.
Cost-of-living adjustments are pegged to inflation, which is negative this year because of lower energy costs. Social Security payments do not go down, even when prices drop.
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Social Security recipients at a senior center in a suburb of Fort Lauderdale, Fla., were not surprised by the news.
"At my age, I've got a nice bedroom, I have clothes, I have anything I want, I got a walker, what else do I need?" said Marie Arrasate, 83, who ran a restaurant and candy shop with her husband in New York and now lives with her daughter in Florida.
"You have to make do with whatever you get. What are you gonna do?" said Ed Nunez, 69, a retired truck driver.
The White House said the stimulus payments would cost $13 billion, though a congressional estimate put the cost at $14 billion. Obama would leave financing the payments up to Congress. He is open to borrowing the money, increasing the federal deficit, just as Congress did with the first round.
Government analysts have been forecasting for months that there would be no increase next year in monthly Social Security payments because of falling consumer prices. In anticipation of Thursday's announcement, Obama said he supported $250 payments to about 57 million senior citizens, veterans, retired railroad workers and people with disabilities.
Seniors groups applauded the proposal, saying the recession has reduced home values and diminished retirement funds. Recipients would be limited to one check.
"Without relief, millions of older Americans will be unable to afford skyrocketing health care and prescription drug costs, as well as other basic necessities," said the AARP's Tom Nelson.
The payments would match the ones issued to seniors earlier this year as part of the government's economic recovery package. They would be equal to about a 2 percent increase for the average Social Security recipient.
Social Security has been the backbone of the safety net for older Americans since it was enacted in the 1930s. With Medicare, the government health insurance program for the elderly, it helps keep millions of seniors out of poverty.
The average monthly Social Security payment for all recipients is $1,094.
Some Social Security experts say recipients shouldn't get a raise or an extra payment next year because their purchasing power already has increased with falling consumer prices.
They note that Social Security payments increased by 5.8 percent this year, the biggest rise since 1982, largely because of a spike in energy prices in 2008.
Over the past 12 months, gasoline prices have fallen 29.7 percent, and overall energy costs have decreased 21.6 percent, the Labor Department said Thursday. Consumer prices are down 2.1 percent over the past year.
"The real purchasing power of their benefits is actually higher today than it was last year," said Andrew Biggs, a resident scholar at the American Enterprise Institute.
But advocates for the elderly say they deserve a raise because they spend a disproportionate amount on health care, which rises faster than other consumer prices.
"Any senior living in the real world knows that the cost of living has gone up over the last year," said Sen. Charles Schumer, D-N.Y.