There was no annual adjustment to Social Security benefits for inflation during 2010 or 2011. That's because the 2009 increase of 5.8 percent (announced in November 2008, and considered the "2009" increase at this table) was artifically lifted by the $4 per gallon gas prices seen in the summer of 2008, the period used in the annual inflation adjustment calculation. After gas prices came down, overall prices levels were slightly lower during the next two years.
With that background, it's hard to imagine how a headline writer at the Associated Press, aka the Adminstration's Press, could transform what writer Stephen Ohlemacher accurately described as an "historically small increase" to "among the lowest in years" — unless it's to create a false impression among those who only read headlines that the government is being unduly stingy in disbursing benefits. Excerpts from Ohlemacher's report follow the jump (bolds are mine):
SOCIAL SECURITY RAISE TO BE AMONG LOWEST IN YEARS
For the second straight year, millions of Social Security recipients, disabled veterans and federal retirees can expect historically small increases in their benefits come January.
Preliminary figures suggest a benefit increase of roughly 1.5 percent, which would be among the smallest since automatic increases were adopted in 1975, according to an analysis by The Associated Press.
Next year's raise will be small because consumer prices, as measured by the government, haven't gone up much in the past year.
... Nearly 58 million retirees, disabled workers, spouses and children get Social Security benefits. The average monthly payment is $1,162. A 1.5 percent raise would increase the typical monthly payment by about $17.
The COLA also affects benefits for more than 3 million disabled veterans, about 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor.
Automatic COLAs were adopted so that benefits for people on fixed incomes would keep up with rising prices. Many seniors, however, complain that the COLA sometimes falls short, leaving them little wiggle room.
Since 1975, annual Social Security raises have averaged 4.1 percent. Only six times have they been less than 2 percent, including this year, when the increase was 1.7 percent. There was no COLA in 2010 or 2011 because inflation was too low.
The final bolded paragraph above is convenient framing. It is also likely that "many seniors" find that the increases are either adequate or not relevant. But the complainers get the ink and bandwidth. And of course, you can forget about AP reminding readers of Social Security's permanent cash-flow deficit or long-term unsustainability.
Ohlemacher's narrative only implies an important truth about 2010 and 2011. Because the 2009 increase was so large and did not get reduced when overall prices went down, beneficiaries on an overall basis received more in benefits than they needed to maintain their standard of living during the next two years.
But to reiterate the main point: Only two years removed from two consecutive years of no increased at the all, the AP story's headline describing the anticipated 2014 as the "lowest in years" is extraordinarily weak.
Cross-posted at BizzyBlog.com.
