Senate rejects $250 checks for elderly

A U.S. Armed Services veteran holds an American and a French flag during the Veterans Day parade in New York November 11, 2009.

WASHINGTON (Reuters) - A measure to give some 57 million elderly people, veterans and persons with disabilities a $250 check was rejected by the Senate on Wednesday, a setback for the powerful seniors' lobby.

President Barack Obama has called for Congress to approve the payments to make up for their benefits not increasing this year, but the Senate defeated it 50 to 47.

The payments would have added $13 billion to a $108 billion job-creation package pending in the Senate.

Congress approved payments last year as part of the $862 billion stimulus package.

Social Security payments for the elderly and disabled will stay flat this year for the first time since 1975 because they are tied to consumer prices, which decreased amid the worst economic recession in 70 years.

That follows a year in which payments rose by 5.8 percent, largely due to a spike in gasoline prices.

"It is wrong to turn our backs on seniors in this moment of economic difficulty," said Independent Senator Bernie Sanders, who sponsored the amendment.

But Republican Senator Judd Gregg pointed out that the bill would defeat the purpose of indexing Social Security payments to inflation.

"The law says it shouldn't be given," Gregg said.

At least 10 Democrats agreed with Gregg and joined 40 Republicans to defeat the proposal.

(Reporting by Andy Sullivan; Editing by Xavier Briand)