Archive for Thursday, October 22, 2009

COLA substitute makes little sense

October 22, 2009

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— Three years before Rep. Wilbur Mills, the Arkansas Democrat who then chaired the Ways and Means Committee, had his fling with a stripper named Fanne Foxe, aka “The Argentine Firecracker” (Mills joined her on stage at Boston’s exquisitely named Pilgrim Theater, which specialized in what Time magazine primly called “ecdysiast exhibitions”; this was after he had a fracas with Ms. Foxe that provoked her to jump into Washington’s Tidal Basin across from the memorial to Thomas Jefferson, who really believed that democracies could behave rationally), he decided to seek the Democrats’ 1972 presidential nomination. So in an almost admirably straightforward attempt to buy the votes of the elderly, he successfully championed an automatic COLA — cost of living adjustment — for Social Security.

His campaign fizzled but his achievement endures, and his place in liberalism’s pantheon is secure. His COLA, which began in 1975, is the entitlement that proves that the entitlement system, like the universe, will expand until, perhaps like the universe, it collapses in on itself.

Barack Obama has now established Mills’ Social Security COLA as the capstone to the architecture of the entitlement culture that is modern liberalism’s crowning achievement: It is an entitlement to which you are entitled even when you are not entitled to it. Obama says 57 million Americans — every Social Security beneficiary and some other recipients of federal entitlements — are entitled to $250 apiece to assuage the disappointment of having not been injured by inflation. Because the cost of living declined 4 percent last year, the 57 million are not entitled to the actual COLA, but they evidently are going to be declared entitled to monetary consolation for the misfortune of not experiencing misfortune.

This is the second continent-wide shower of $250 checks. The first came from the $787 billion stimulus package enacted in February. There will not be another such shower, until the next one.

In January, retirees received a 5.8 percent COLA, the largest since 1982, primarily because of a surge in energy prices, which since have declined. Furthermore, after lifetimes of accumulation, Americans over 60 have the highest net worth of any age cohort. So why the special solicitude for them during an economic downturn that has afflicted almost everyone?

Obama says “we must act on behalf of those hardest hit by this recession.” But are they the hardest hit? How does he know? By what measure? Is it possible that, say, the millions who have lost jobs have been hit harder than retirees?

Andrew Biggs of the American Enterprise Institute notes that a “lost” COLA can mean a significant increase in the value of retirees’ entitlements. Because falling prices increase the purchasing power of stable benefits, and because many Medicare premium increases are limited in years in which no COLA is paid, the typical retiree’s purchasing power will be almost $725 higher next year.

More than 40 percent of the voters in 2008 were at least 50 years old. Perhaps Obama can do better than Mills did at purchasing the affections of the elderly. He needs to because they are especially unenthralled about his plans for their health care.

But about one thing, they should relax. A president who cannot resist dispensing a semi-COLA after the cost of living declines will not really fund a substantial portion of the new health care entitlement by cutting more than $400 billion from Medicare. And speaking of the unbelievable:

Maine Sen. Olympia Snowe is being beatified as the incarnation of bipartisanship because, of the 217 Republican senators and members of Congress, only she cast a vote for a Democratic health care addition to the nation’s Ponzi entitlement structure. Yet in 2005 she opposed a Republican plan for shaving just $10 billion from government health care entitlements over 10 years. If, as seems probable, she would have opposed the health care bill she just voted for if Republicans had proposed it, does that devalue her version of bipartisanship?

Perhaps the 57 million $250 handouts should be seen as a down payment on a stealthy Stimulus III, which Democrats do not have the audacity to advocate candidly. In any case, Obama, whose inaugural address was a summons to “responsibility,” does not even feign an intention to pay for them with offsetting economies. The money will be borrowed, much of it from abroad, much of that portion from China. Fortunately, foreigners have unlimited appetites for lending to America. Don’t they?

Comments

Glenda Breese 5 years, 7 months ago

I can tell he is not on social security. What a crock! my cost of living increased because,my medigap policy increased, my part d policy increased, my rent went up by 47.00,my cost of food went up. my sales tax went up on everything. The only thing that did not was gas. I sure hope Mr Will does NOT get a raise this year. Oh but I bet he makes plenty already! Unlike him I know what it"s like to live in the real world.

emptymind 5 years, 7 months ago

Everything goes up but the retiree's COLA .....how embarrassing for the country. Very soon we will see thousands of baby-boomers in homeless shelters . Then the drain on social services will go so high, they will be thrown off the train. Tumbling dice

james bush 5 years, 7 months ago

Obama the pied piper of young and old is giving away your money, your children's money, your grandchildren's money and that of the unborn. IT'S OBAMA MONEY! IT'S FREE! Bush was just as bad. Stop government takeover.

George Lippencott 5 years, 7 months ago

I respect Mr. Will-his insights are usually informative. In this case, I have a problem with his generalization. Social Security and Medicare are large entitlements. However, Social Security and Medicare are paid services. Did we collect enough? Maybe not? Where is the money? Our government spent it on goods and services for the populace at large-that means you the reader. Are the seniors at fault for the fact that the government spent their money?

Yes, many seniors have saved all their lives as our culture used to expect and many have resources beyond social security. That said more than half exist on Social Security with maybe a small pension to supplement. Many are on Medicaid because their income is insufficient to pay for Medicare. Medicare will increase in costs next year. Social Security will not. Maybe the $250 for the lower income players is simply a down payment so more will not have to move to Medicaid? These people are hardly in the “golden years” so proclaimed in our past culture.

Mr. Will implies this problem is simple-reduce payments. It is not as most of the participants (all of us tax payers at whatever age) are innocent but will likely bear the burden of very poor government decisions (both parties). Maybe seniors have a right to be very distrustful of governments bearing gifts!! They did not ask for this politically motivated payment.

We are now adding a 1 trillion plus benefit for everyone and do not seem to have found the money to pay for it except by taking it from past promised benefits. This is at the very moment when we cannot find the money to pay for those past promises! Will this latest entitlement become the future unfunded entitlement (the government is not obligated to pay it) and we will renege on it also??.

Orwell 5 years, 7 months ago

I've got it – let's oppose subsistence income for the elderly, basing our argument on the eccentric personal proclivities of an Arkansas congressman from the 1970s! I'll bet I can construct an opening sentence that runs over ninety words!

Great job, George – get a life, then get an editor.

Richard Heckler 5 years, 7 months ago

Mr Will,

How in the world do you expect the USA economy to recover from NAFTA,ENRON,DOT.com scandal,Bernie Maddoff,the book cooking scandal,20 million job losses and all those millions more white collar jobs going to India?

Then we have these job losing scenarios: 1. The Reagan/ Bush Home Loan Scandal http://rationalrevolution0.tripod.com/war/bush_family_and_the_s.htm

  1. The Bush/Cheney Home Loan Scandal http://www.dollarsandsense.org/archives/2009/0709macewan.html

  2. What did Bush and Henry Paulson do with the bail out money? http://www.democracynow.org/2009/9/10/good_billions_after_bad_one_year

AND this retirement insurance rip off scandal

  1. Why did GW Bush Lie About Social Security?( This would cost taxpayers $4 trillion and wreck the economy) http://www.dollarsandsense.org/archives/2005/0505orr.html

tbaker 5 years, 7 months ago

Ah Merrill - right on time.

Why must you (and others) operate on the default setting that posits only the federal government can hope to solve the impenetrable mysteries of daily life; that it must be the federal government stepping in and "helping" individual Americans? Why? What causes you to think that way? It's flatly un-American, yet it is very common. It really vexes me. Have you ever read the constitution? Its not very long.

Have you no faith in individual human beings? Do you not know the principal responsibility of our federal government is to protect the sovereignty and god-given rights and liberty of the individual American? Have you ever considered federal government doing what it can to clear the way for people to take care of themselves? Tell me Merrill, where in our constitution is the concept that says the purpose of our federal government is to "provide" for individual people? Show me where it says our federal government is to operate a giant assisted living facility for all of us.

I'll not hold my breath. This entitlement thinking is organic to your brain. Even the Senate Judiciary Chairman Patrick Leahy (D-Vt.) couldn't answer the simple question: What part of the Constitution grants Congress the power to force every American to buy health insurance--as all of the health care overhaul bills currently do.

If he doesn't have a clue, it would be unfair for me to think you did.

George Lippencott 5 years, 7 months ago

Orwell (Anonymous) says

I am humbled at the reference to my fractured literary endeavors.

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