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Obama asks Congress to back new payments to elderly

US President Barack Obama yesterday proposed another US$13 billion in spending next year -- or US$250 per person -- to help some 57 million senior citizens, disabled people and military veterans weather the economic recession.

The funds would extend the one-year US$250 "Economic Recovery Payments" program approved this year as part of the US$787 billion economic stimulus package, but administration officials said it should not be viewed as the start of a second stimulus plan.

"Even as we seek to bring about recovery, we must act on behalf of those hardest hit by this recession," Obama said in a statement urging Congress to approve the plan.

"These payments will provide aid to more than 50 million people in the coming year, relief that will not only make a difference for them, but for our economy as a whole," he said.

An administration official said the president would not insist that the US$13 billion program be paid for by offsetting cuts in federal spending. The official said in the context of a recession, such spending is often not offset.

"We're going to have a conversation with Congress about the details, but one of the things the president will insist on in that conversation is that whatever way it's structured, Social Security solvency would not be adversely affected," the official said, referring to the government retirement program.

Congress would need to draft legislation enacting the measure and approve it.

Obama's call for Congress to expand the program of US$250 payments for another year comes as people receiving Social Security benefits face the prospect of no cost of living increase next year.


Consumer Price Index figures used to compute the cost of living adjustments are due on Thursday and are expected to show negative inflation over the past year, administration officials said, speaking on condition of anonymity.

In such cases, they said, Social Security benefits remain at the same level as the previous year.

A spokesman for the Senior Citizens League, a nonpartisan seniors advocacy group, said the one-time payment does not come close to what seniors will lose without an actual cost of living adjustment in their Social Security checks next year.

"Although any help for seniors is desperately needed, this one-time payment is not enough, said spokesman Brad Phillips.

"Under this plan, the average senior retiring this year will lose US$10,134 throughout a 20-year retirement due to the loss of the compounding effect of an average annual benefit increase of three percent," he said.

The amount people can contribute to 401 (k) accounts, Individual Retirement Accounts and defined benefits plans also are affected by negative inflation, the officials said. Some in the investment community have expressed concern that contribution limits might be reduced, they said.

"The Treasury Department and the IRS (Internal Revenue Service) will be issuing a release later this week -- tomorrow or the next day -- that will indicate that our interpretation of the statutory cost of living adjustment formula is that there will be no decrease," said one official.

"The Treasury interpretation will prevent any reduction in those pension, 401 (k), IRA dollar limits and thresholds for 2010," the official added.

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

Most of the checks were sent out in May, but 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.

Administration officials indicated they were looking at trying to extend several other one-year programs included in the Recovery Act stimulus bill approved in early 2009.

"There are other things in the Recovery Act, like unemployment insurance and Cobra (health insurance) that also expire this year that administration officials have said the president would like to see extended given the nature of the hardship," officials said.


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