Social Security

Democrats to Seniors: We Would Like to Give You Some Free Money. Hint, Hint.

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One thing both parties can agree on? When all else fails, pander to seniors.

Republicans did it with Medicare during the health care debate. Now, as the election approaches, Democrats are pushing for a one-time boost in Social Security payments. Free money! Sort of.

Free money?! From the government?!

Last week, the Social Security Administration announced that the program's beneficiaries wouldn't see a cost-of-living increase in their benefit payments this year. So President Obama and Democratic leadership in Congress have proposed to give Social Security recipients a $250 bonus. White House spokesdork Ribert Gibbs is "urging" legislators "on both sides of the aisle to support our seniors" and House Speaker Nancy Pelosi has said she'll schedule a vote on the bonus payments for November.

Now, as political proposals go, "Here is some free money for you, people-who-vote-in-high-numbers-during-midterms" makes an obvious sort of sense. And certainly the senior-friendly lobbyists at AARP think this is deserved. Seniors are being squeezed. Drug costs are up. What will grandma do when she wants to take the grandkids to Wally World? Etc. etc.

The $250 bonus proposal is being called an "Economic Recovery Payment." But the only thing seniors are recovering from is an extra-large increase in benefits.

In fact, this year's payments are still scheduled to be higher than the consumer price index they typically track. How's that? In 2009 Social Security benefits rose significantly when energy prices briefly spiked. But since then, overall consumer prices have come down. Social Security payments haven't been increased, but they haven't been reduced either.

At U.S. News, John Farrell explains:

Soaring energy prices in 2008 produced a whopping 5.8 percent COLA hike in 2009—the largest in 27 years. Then energy prices and other costs plummeted in the recession. Inflation was kept in check by the tough economic times. The government didn't ask Social Security recipients to pay the money back, or to take a cut last year. It simply didn't add another COLA.

The result, as the folks at the Committee for a Responsible Federal Budget helpfully show, is that Social Security payments are, in fact, currently higher than if they had followed the Consumer Price Index.

CRFB suggests we call it a Cost Of Reelection Adjustment, and offers a reminder that neither Social Security nor the overall federal budget are exactly in tip-top shape:

A one-time payment to seniors or ad-hoc COLA would be economically unjustifiable since doing so would actually be relative benefit payment increase. With our fiscal outlook so poor and with Social Security's projections just as bad, increasing relative benefits, while politically a good move (I mean, who wouldn't want free money!), is a terrible fiscal idea. Such a proposal (whether offset or not) would truly reflect poor policymaking and blatant pandering.

"Poor policymaking." "Blatant pandering." Terrible, yes. But have some sympathy. How else are our nation's politicians supposed to get themselves elected?