Social Security, Cost of Living and Congress
By Harris Sherline
August 31, 2009
If Social Security checks are not going to be increased for two years because the Cost of Living Adjustment (COLA) has not gone up, does that also mean members of Congress will forgo their annual pay raises as well?
I'm kidding, right?
Well, only partially. Since annual increases in the compensation of legislators in Congress are also pegged to COLA, will they still be entitled to a pay raise in 2010 if the COLA has not increased? And, if they do get a raise, should they voluntarily decline it?
Fat chance! Forgive me if my cynicism is showing, but at my age I've lost most of my idealism.
Consider the following note I received from a woman whose sole source of income is Social Security: "I am so upset that we are not getting a raise pursuant to the cost of living increase for Social Security. I am on Social Security Disability and was looking forward to the small increase I would be receiving this year!! You are so correct --- the prices of food and all other items we need to purchase are frightening! Why pick on us - the ones who need this money the most? I am shocked they are doing this to us the vulnerable!"
Unfortunately, I don't have a good answer for her. Her Social Security income is normally increased every year by an annual Cost of Living Adjustment, but since COLA has not gone up, her Social Security checks will not change for the next two years. Actually, they are likely to go down because, chances are, her Medicare insurance payments are deducted from her Social Security checks, and since the Medicare insurance rates will continue to increase, her monthly net checks will be smaller.
Members of Congress receive an automatic Cost-Of-Living-Adjustment every year unless they vote not to accept it. It will be interesting to see if they are treated the same way as Social Security beneficiaries, that is, if their pay is also not increased in 2010 because the Cost of Living index has not gone up.
Looking at the situation another way, historical data on annual Congressional compensation shows that it has grown from $5,000 in 1900 to $174,000 today, an increase of 3,380% or 31.2% a year compared with the Consumer Price Index, which grew 2,085%, 21.9% per year, from 1913 to 2008. In short, Congressional pay has increased an average of about 10% more per year than the average annual increase in consumer prices.
While the compensation of our "public servants" has increased an average of over 31% a year since 1900, they have also depreciated the value of the dollar to the point that it now costs $26.45 to buy goods and/or services that cost only $1.00 in 1900.
Is that the kind of track record that justifies the size of the increases in compensation members of Congress have given themselves?
In addition to receiving wages that generally exceed those of most of their constituents, members of Congress also receive generous perks and participate in a retirement plan that is generally superior to anything that's available to most of the people they represent who work in the private sector.
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