This fall, as American families anticipate the holiday season and an uncertain economy in 2010, they’re likely to decide to cut back. Maybe they’ll stay home for Thanksgiving instead of flying to Grandma’s house. They’ll put fewer gifts under the Christmas tree.
It’s a pity our political leaders aren’t inclined even to consider such frugality.
Two recent stories prove that, far from cutting back in the face of recession, Congress and the Obama administration are eager to expand entitlement spending. Take Social Security.
Every January, recipients’ benefits are adjusted for inflation. This cost of living adjustment (COLA) usually results in retirees receiving a larger payment, because the cost of living usually goes up. But it didn’t this year.
The recession has driven prices down across the board, and the cost of living has actually declined by almost 5 percent. Because of that, and because Medicare premiums won’t increase next year, spending analyst Andrew Biggs of the American Enterprise Institute estimates that the average Social Security recipient will have about $725 more in purchasing power next year. So, reasonably, Social Security plans to skip the COLA.
But not if the Obama administration can help it. The president wants to give each person on Social Security $250 next year. That may not sound like a lot, yet this little giveaway would cost future taxpayers $13 billion. And, as Social Security expert David John of The Heritage Foundation writes, it would start “the process of converting the program from an earned benefit funded by a worker’s own contributions to a welfare program.” With the program already facing massive unfunded deficits in the decades ahead, the proposed giveaway is exactly the wrong approach.
At the same time Obama was prepping to shower seniors with $250 checks, Congress was trying to spend a much bigger sum -- almost $250 billion -- without actually paying for it.
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