For the second year in a row, there will be no COLA increase for Social Security recipients in 2011. This effects over 58 million retired and disabled Americans, and you would think that such information coming out so close to an election would be difficult news for the party in power. However, House Democrats are making lemonade out of it, vowing to vote in November on a $250, one-time benefit for Social Security recipients. As the average monthly check for Social Security is a little over $1,000 a month, this comes out to effectively a 2% annual increase in the program benefit, which is roughly the inflation level set by the Federal Reserve. The difference in this case is that the $250 wouldn’t get factored into the baseline level for Social Security in future years. But that’s set by the Social Security Administration, not the Congress; a one-time benefit is basically what Congress can do.

Democrats provided a similar $250 benefit for 2009 in the stimulus package. The bill, the Seniors Protection Act, was introduced by Rep. Earl Pomeroy (D-ND), who runs the key subcommittee on Ways and Means that oversees Social Security. The White House has supported extending the $250 benefit since last year, but they were unable to get it past the Senate for 2010. However, Speaker Pelosi has vowed to try again. Here’s her statement:

The Seniors Protection Act, introduced by subcommittee Chairman Earl Pomeroy, provides America’s seniors and all Social Security recipients with a one-time payment that will help millions make ends meet during these difficult economic times.

In the event that the Social Security Administration announces it will not provide a Cost-of-Living Adjustment (COLA) for recipients this year, the House will vote to provide seniors with a one-time payment of $250. I have asked the Ways and Means Committee to bring this legislation to the floor during the lame duck session. All Members of Congress should join us in supporting this legislation which will be fiscally responsible and upholds our bedrock promise of economic security for our nation’s seniors.

I assume “fiscally responsible” means that it would include an offset to the spending.

Rank and file members cheered the intended action. Judy Chu (D-CA) said that cuts in local government for seniors needed to be offset with this one-time benefit. Seniors have “had vital benefits slashed as local governments cut programs in response to budget shortfalls. They’ve seen the rising cost of prescription drugs outpace the prices paid for other goods and services. Now is not the time to put their economic security at further risk.” Pomeroy, the bill’s sponsor, who is facing a tough re-election in North Dakota, added, “Passing this bill will ensure that the lack of cost-of-living adjustment will not jeopardize seniors’ ability to survive on their benefits.”

While Democrats across the country could use the Seniors Protection Act as an election-year promise, and while it would fit with many campaigns that have attacked Republican opponents for wanting to privatize or eliminate Social Security, the message could be undercut by the looming fiscal commission, which could issue recommendations to cut benefits even as Democrats seek to pass a bill that would increase them for 2011. Just yesterday at a youth town hall, President Obama asserted the need to strengthen Social Security, and while he preferred the option of raising the payroll tax cap, he left all options “on the table”:

That’s why we’ve got to strengthen it. And I have said that all options are on the table. I think we’ve got to look at how we preserve it for the next generation. I do think that the best way to do it would be to look at the fact that right now you only pay Social Security taxes up to about $106,000, and after that, you don’t pay any Social Security tax. So that means Warren Buffett, who makes more than $100,000 a year, the vast bulk of his income, he doesn’t pay Social Security taxes on it. That could be modified or changed in a way that would help extend the solvency of Social Security.

But this is an area where — I’m sorry, what was the young lady from Austin — this is where Cynthia’s point about bipartisanship is so important. I set up a bipartisan fiscal commission that is made up of Republicans and Democrats to sit and meet over the last several months to start looking at how we generally start reducing our debt and our deficit so we’re not leaving it to the next generation. They’re supposed to report back to me after the election because we specifically designed it so they wouldn’t get caught up with silly season and would be able to just focus on what makes sense.

They’re going to provide that report to us around the 1st of December, and my hope is from there that we can get a Republican-Democratic agreement on how we strengthen Social Security as well as looking at some of these other major expenditures that we have that we’ve got to deal with to make sure that we’re not just leaving you guys with a mountain of debt.

This sort of muddles the message.

UPDATE: The President jumped in strongly in favor of the $250 one-time benefit. Robert Gibbs released this statement:

Many seniors are struggling in the face of the economic downturn, having seen their savings fall. Today’s news that the Social Security Administration will for a second year not provide a cost of living adjustment for social security benefits highlights these struggles. The President will renew his call for a $250 Economic Recovery Payment to our seniors this year, as well as to veterans and people with disabilities. Last year, under the Recovery Act, 56 million people benefited from the first Economic Recovery Payment—including about 50 million Social Security beneficiaries. We’re grateful that Speaker Pelosi has indicated she will bring the new Economic Recovery Payment to a vote and we urge members of Congress on both sides of the aisle to support our seniors, veterans and others with disabilities who depend on these benefits.

I could see this becoming part of the Democratic stump speech in the days to come.