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Published: Thursday, 10/15/2009

President requesting $250 checks for seniors


WASHINGTON - President Obama called on Congress yesterday to approve $250 payments to more than 50 million senior citizens to make up for no increase in Social Security next year.

The Social Security Administration is scheduled to announce today that there will be no cost of living increase next year.

By law, increases are pegged to inflation, which has been negative this year.

It would mark the first year without an increase in Social Security payments since automatic adjustments were adopted in 1975.

"Even as we seek to bring about recovery, we must act on behalf of those hardest hit by this recession," Mr. Obama said.

The $250 payments would also go to those receiving veterans benefits, disability benefits, railroad retirees, and retired

public employees who don't receive Social Security.

Recipients would be limited to one payment, even if they qualified for more.

The White House put the cost at $13 billion.

Mr. Obama said he would not allow the payments to come out of the Social Security trust funds, further eroding the finances of the retirement program.

Social Security already is projected to pay out more in benefits than it collects in taxes in each of the next two years.

But the President did not offer any alternatives to finance the payments.

A senior administration official said Mr. Obama was open to borrowing the money, increasing the federal budget deficit. The official requested anonymity.

The $250 payments would match the ones issued to seniors earlier this year as part of the massive economic recovery package enacted in February.

Under the "Economic Recovery Payments" program this year, $250 checks were mailed to some 55 million people at a cost of $13.7 billion.

Administration officials said the timing of next year's checks would depend on when the legislation was approved and when the administrative details could be worked out.

Mark Zandi, chief economist of Moody's Economy.com, said the checks would not add a lot to economic growth early next year.

"This is symbolic of policymakers' willingness to provide more temporary help to the economy, which I believe is appropriate," he said.

Support for the additional payments is certain to be bipartisan, given the political influence of older Americans, but Republicans may seize the opportunity to draw attention to persistent economic woes.

"This regrettably shows that families and seniors continue to struggle in this severe economic downturn, and that the 'stimulus' has failed to live up to its billing," said Antonia Ferrier, a spokesman for Rep. John Boehner (R., Ohio), the House minority leader.

Several key members of Congress have said they are open to providing relief to seniors to make up for no increase in Social Security payments.

"We're looking at a way to address it," said Sen. Max Baucus (D., Mont.), chairman of the Senate Finance Committee, which oversees Social Security.

"I'm not sure what the exact answer is yet, but we're looking at ways to address that."

Other lawmakers said seniors shouldn't get the extra payments because the formula doesn't call for it.

"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."

Social Security payments increased by 5.8 percent in January, the largest increase since 1982. The big increase was largely because of a spike in energy costs in 2008.

Inflation has been negative this year largely because energy prices have fallen.

Gasoline prices have dropped 30 percent over the past year while overall energy costs have dropped 23 percent, according to the Bureau of Labor Statistics.

Social Security payments, however, cannot go down. The average monthly Social Security payment for retirees is $1,160.

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