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Monday, October 18, 2010

Bribing the elderly

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.
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.

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.
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?


Locomotive Breath said...

You're quoting something. Is there a missing link in this post?

Betsy Newmark said...

Oops. Sorry about that. Link now added.

2421Rich said...

If there is no cost of living increase there should be no increase in benefits. This President is trying to buy our vote with our own 15 billion. On the other hand, can the government be trusted on thier inflation report? I seem to be spending a lot more for groceries than I did last year.

Freeven said...

The formula for computing cost of living was changed a while back to ignore the cost of home ownership. The new formula instead uses rental costs as a proxy for ownership. This allows the government to make smaller COLA increases during housing booms when mortgages become more expensive. This also means that when housing costs drop, as they have in recent years, the official cost of living estimate will be too high. The end result is that this bill will send money to those who have already come out ahead of the game.

Joe said...

Easy to say inflation is negligible when most of the things people living on fixed incomes purchase are not considered in estimating inflation.....utilities, property taxes, food, medical expenses.

If we all only bought computers and clothing, inflation would be nonexistent. Fact is, it takes more than these two items to survive.

No, I'm not asking for a COLA or for their 250 bucks, just saying they can justify any decision they make and, unless you're the poor bastard trying to get by on 1138 bucks a month, you probably will agree with their numbers.

The Vegas Art Guy said...

Power, it's always about power.