There will be no cost of living increase for more than 50 million social security recipients next year, the first year without a raise since automatic adjustments were adopted in 1975, the government announced Thursday, blaming it on failing consumer prices. By law, cost of living adjustments are pegged to inflation, which is negative this year because of lower energy costs. Social Security payments, however, cannot go down.

Thursday’s announcement comes a day after President Barack Obama called for a second round of $250 stimulus payments for seniors, veterans, retired railroad workers and people with disabilities.

The payments would match the ones issued to seniors earlier this year as part of the government’s economic recovery package. The payments would be equal to about a 2 per cent increase for the average Social Security recipient.

Social Security payments increased by 5.8 per cent in January, the largest increase since 1982. The big increase was largely because of a spike in energy costs in 2008.

“Social security is doing its job helping Americans maintain their standard of living”, said social security commissioner Michael J. Astrue

But, he added, “In light of the human need, we need to support President Obama’s call for us to make another $250 recovery payment for 57 million Americans.”

The Labor Department reported Thursday, that consumer prices had declined 2.1 per cent from July through September compared to the same period a year ago. The cost-of-Iiving adjustment for Social Security is based on the change in consumer prices from the third quarter of one year to the next.

The lack of a cost of living increase triggers several provisions in the law. Among them, the amount of wages subject to Social Security payroll taxes will remain unchanged. The first $106,800 of a worker’s earned income is currently subject to the tax.

Also, Medicare Part B premiums for the vast majority of Social Security recipients will remain frozen at 2009 levels. However, premiums for the Medicare prescription drug programme, known as Part D, will increase.

Obama called on congress Wednesday to approve the second round of stimulus payments, and several key lawmakers said they would.

“This additional assistance will be especially important in the coming months, as countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis,” Obama said in a statement.

The $250 payments would go to Social Security recipients as well as those receiving veterans or disability benefits, railroad retirees, and retired public employees who don’t receive Social Security. Recipients would be limited to one payment, even if they qualified for more.

The White House put the cost of the payments at $13 billion. Obama said he would not allow the money to come out of the Social Security trust funds, which would further erode the finances of the retirement programme. Social Security already is projected to pay out more in benefits than it collects in taxes in each of the next two years.