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CBO predicts no retiree COLA on Dec. 1

Military retirees, disabled veterans and others receiving inflation-adjusted federal benefits should not expect to see any increase this year, according to a new Congressional Budget Office estimate.

The projection that there will be no Dec. 1 cost-of-living adjustment in federal benefits came from the nonpartisan CBO in a June 2 statement, publicly released late June 3, that no increase is expected late this year in payments under Social Security, which is the basis for annual increases in military and federal civilian retirement pay, veterans’ disability compensation and survivor benefits.

“Based on its current economic forecast, CBO does not anticipate a cost-of-living increase in 2010 for Social Security,” the CBO said.

Social Security, military and federal civilian retirement and some other federal benefits automatically increase each Dec. 1 based on the Consumer Price Index, a measurement of the cost of goods and services maintained by the Labor Department’s Bureau of Labor Statistics.

Largely due to falling energy and transportation expenses, the CPI shows consumer prices are lower today than one year ago. The May 15 report shows costs today are 0.7 percent lower now than one year ago.

A continued drop in the CPI, which is what the nonpartisan CBO forecasts, would not result in any cuts in federal benefits.

Rather, government retirees, Social Security recipients and disabled veterans who are used to having their annual Dec. 1 increase first appear in January paychecks would see no change in benefits because there is no procedure under law for cutting retirement pay and government annuities when consumer prices decline.