The excuse for this bribery is the announcement by the Social Security Administration that, for the second year in a row, seniors will not get a cost of living increase in 2011. Prices rose by only 1.5% in the last year, having fallen nearly 2% in 2009, and seniors aren't supposed to get an increase until prices exceed their last peak.What's the use of having rules for determining when seniors get a COLA increase if politicians will just keep advocating handing out checks anyway?
But lest you think this is a grave injustice, Social Security recipients received a 5.8% increase two years ago. That was the largest increase in 20 years and was based on what proved to be an ephemeral increase in energy prices. Thus for 2009 seniors received a bonus increase of about $500 above inflation.
Congress sent seniors a $250 check last year to make up for the lack of a benefit increase, and as part of ObamaCare it is sending another one this year to seniors whose drug purchases exceed $2,830. Because there is no Social Security cost of living increase, retirees will save about $285 a year on their Medicare Part B premiums that won't rise this year, according to former deputy commissioner of Social Security Andrew Biggs.
Meanwhile, Social Security is now running a deficit—paying more in benefits than it collects in taxes—and the $250 checks would cost taxpayers close to $15 billion. Democrats would add that amount to the fiscal 2011 deficit that is already estimated to be back to more than $1.4 trillion, even as they insist that taxes have to rise to reduce the deficit.
Monday, October 18, 2010
That's what President Obama wants to do. He's dangling a $250 check for seniors as a compensation for not receiving a cost of living increase from Social Security this year. They're not getting the COLA increase because inflation has been so low. But that reality isn't enough for Obama who is advocating sending them a check anyway.