Blames Mike McIntyre and Nancy Pelosi for the second straight year of no cost-of-living increases for Social Security beneficiaries.
National Republican Congressional Committee on Saturday, October 23rd, 2010 in a campaign commerical
NRCC targets Mike McIntyre over Social Security
Scaring voters about what could happen to Social Security if your opponent wins the election is a time-honored tradition in political ads, especially when Democrats are making the accusation. But in something of a twist, the National Republican Congressional Committee -- the campaign arm of House Republicans -- is using Social Security as a cudgel against a Democrat, seven-term Rep. Mike McIntyre of North Carolina.
Here's the transcript of the ad:
Narrator: "Mike McIntyre and Nancy Pelosi are not being honest with North Carolina seniors."
McIntyre: "I'll never risk your Social Security."
Narrator. "But McIntyre and Pelosi's big spending is robbing our Social Security trust fund. Social Security is billions in debt, and this year will be operating in the red. And now for the second year in a row, there's no cost-of-living increase for North Carolina seniors. Mike McIntyre and Nancy Pelosi: Their spending is putting our Social Security at risk."
We've written at some length about the question of whether Social Security is "billions in debt" and "operating in the red." So this time, we thought we'd tackle the notion that McIntyre and House Speaker Nancy Pelosi, D-Calif. -- the ad's boogeyman and boogeywoman -- are responsible for the fact that "for the second year in a row, there's no cost-of-living increase for North Carolina seniors."
We'll begin by pointing out that North Carolina seniors aren't alone in this fate. Social Security cost-of-living adjustments, or COLAs, are calculated on a national basis, not by individual state.
But how are they calculated? Here's the long answer.
Until 1975, it took an act of Congress to adjust Social Security payments for inflation. But a law enacted in 1972 and signed by President Richard Nixon created a formula to automatically calculate the increase every year. The Social Security cost-of-living adjustment was tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The government compares that index in the third quarter (July, August and September) of the current year to the third quarter of the previous year. Until recently, every year since the formula was put into effect, that calculation led to a cost-of-living increase. In fact, high oil prices in the summer of 2008 helped produce a sizable COLA increase in January 2009 of 5.8 percent -- the highest increase in more than a quarter century.
But lower energy prices and the effects of the recession combined to reduce the CPI-W during the period used to calculate the 2010 Social Security increase. So in a break with tradition, there was no upward adjustment for Social Security recipients for this year. When we last looked at this question in January 2010, we reported that for someone with a $3,054 monthly benefit -- a comparatively generous amount, based on what a steady earner at the maximum level would get every month if he or she had retired in 2009 at age 70 -- the amount forgone this year was $1,099 over the course of the year compared to what would have been added with a 3 percent cost-of-living adjustment. Most recipients would take a much smaller hit, according to Social Security Administration tables.
And earlier this month, the Social Security Administration announced that there will be no increase for Social Security recipients in 2011, either.
So the ad is correct that Social Security beneficiaries will go without an inflation bump for the second straight year. But that's not the whole story.
First, there may not be an increase in benefits for next year, but it's because on the whole, seniors' cost of living isn't increasing. (That's the idea anyway; individual circumstances can and do vary.) And beneficiaries had already received a big bump for 2009. If current patterns hold, seniors should finally be due for a new bump in benefits for 2012.
Second, some people contributing to Social Security will actually benefit from not having a Social Security increase. When benefits don't go up, neither does the $106,800 limit on earnings subject to the Social Security payroll tax.
Third -- and most important for analyzing the ad -- McIntyre and Pelosi had nothing at all to do with eliminating the COLA for 2010 and 2011. As we indicated, whether or not Social Security hands out an increase is determined by a mathematical calculation -- not by Congressional prerogative. Short of changing the decades-old law, there's nothing McIntyre or Pelosi could have done to provide beneficiaries with an increase in either of the two years.
However, there's one more factor worth noting. Pelosi and other Democrats have proposed giving seniors a one-time $250 payment in lieu of a cost-of-living adjustment, as was done after the first non-COLA announcement. But nothing g can be done until after the election. It is this proposal that the NRCC uses to back up the claim.
In an interview, an NRCC spokesman argued that the proposed COLA "fixes" may not win passage because of recklessly large spending by Congressional Democrats.
The NRCC has a point, but Pelosi's office says that a vote is planned for November, and in any case, it strikes us as a bit of a convoluted explanation for the ad's claim. The simpler explanation -- and the one that we think most viewers would take away from the ad -- is that McIntyre and Pelosi had something directly to do with eliminating a cost-of-living increase for two consecutive years in the first place. Even though the ad carefully avoids an explicit accusation that McIntyre and Pelosi voted to eliminate the COLA, we think the ad implies otherwise. So we rate this part of the ad Barely True.
Editor's note: This statement was rated Barely True when it was published. On July 27, 2011, we changed the name for the rating to Mostly False.