Cost of Living Adjustment Remains Zero

by Robert Stretch on November 16, 2010

The federal government will not adjust federal income earnings for inflation in 2011, the second consecutive year with a Cost of Living Adjustment (COLA) of zero. Those affected in military retirees, disabled veterans and social security recipients.

Subsequent years’ COLA depends on the Consumer Price Index (CPI) of the preceding year. The result is the actual rate of inflation. A major problem is that the rate of inflation has not been positive since 2008, making 2008 the base year for computing the rate of inflation in 2010.

Therefore, the 2010 rate of inflation is -0.1 percent after getting compared to 2008. Without a positive rate of inflation, there will be no 2011 COLA. Usually, COLA changes earnings for certain recipients. Such earnings include military retirement, VA pensions and payments, and Social Security benefits. In this case, an absence of COLA will freeze the federal payments received by recipients.

COLA is based on a formula, making it an apolitical tool. However, Sen. Harry Reid (D-Nev.) said he wants to give Social Security recipients an extra $250 in 2011. Other Democrats got behind the idea. President Obama supports giving a one-time $250-payment to not just Social Security recipients, but also to military-connected recipients.

Photo thanks to American Progress Action under creative common license on Flickr.

{ 1 comment… read it below or add one }

robert d sherman January 12, 2011 at 10:24 pm

Their are a lot of pro’s and con’s for this program like with everything that is going on in this country why should we have to be put on a program like this,is it that the government wants to have control of the funds that we get and the funds that we get are not a lot, some of us have a hard time getting what we deserve and we get can’t those extra funds because the government is trying to save a few penny’s at our expense. So that being said, this new program is good but bad, with the paper checks and knowing that we can get our money faster and not being hack in to the system with these new cards. Just a thought and concern…..

Reply

Leave a Comment

Previous post:

Next post: