Obama also claimed the help is essential because "countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis." What's his excuse for singling out seniors? Most everyone with a house or a 401(k) has gotten whacked, and the government can't afford to help them all.
What no one mentions is that Social Security beneficiaries already got a bonus in the original $787 billion stimulus package, which provided them with payments of $250 apiece. That's the rough equivalent of a 2 percent COLA. If the president gets his way, they will get a total of 4 percent. That, in combination with the drop in the CPI, means they'll have about 6 percent more in inflation-adjusted dollars this year than last. Not many other Americans can say that.
The final pretext is that the payouts will provide "a boost to our economy," in the words of House Speaker Nancy Pelosi -- presumably because they will spur spending. Trouble is, giving people money doesn't mean they will head to Walmart. When the Bush administration sent out rebates, most of the cash apparently went to pay off debt or bolster savings, neither of which spurs the production of goods and services.
"Because of the low spending propensity, the rebates in 2008 provided low 'bang for the buck,'" concluded a study by University of Michigan economists Matthew Shapiro and Joel Slemrod. "Given the further decline of wealth since the 2008 rebates were implemented, the impetus to save a windfall might be even stronger now."
The cost of this stimulus would be $13 billion, according to the White House. But if the $787 billion stimulus served its purpose, why is the additional boost necessary? If $787 billion didn't do the trick, what is $13 billion going to accomplish?
My suspicion is that most old people, given the facts, would be mature enough to understand that there is no good excuse for this windfall. It's the politicians who need to grow up.
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